Previously Scrapped by President Yoon's Veto
People Power Party: "Tax Revenue Shortfall Expected"
The so-called Local Currency Act amendment, which mandates national financial support when issuing local gift certificates known as local currency, passed the National Assembly’s Public Administration and Security Committee on July 10, led by the Democratic Party of Korea.
On this day, the Democratic Party passed the amendment to the Local Currency Act in a vote at the full committee meeting, relying on its majority despite opposition from the People Power Party.
The amendment stipulates that national financial support for the issuance of local currency will be strengthened from a discretionary provision to a mandatory one. To this end, the state will be required to provide financial support to local governments that issue local currency. In addition, a basic plan to promote local currency use must be established every five years, and related fact-finding surveys must be conducted.
The Democratic Party had previously adopted the Local Currency Act amendment as a party platform and passed it in a plenary session last year, but it was scrapped after President Yoon Suk-yeol exercised his veto power.
Afterward, the Democratic Party pushed the amendment through a vote in the Public Administration and Security Committee’s subcommittee despite opposition from the People Power Party, and on this day, also passed it alone in the full committee meeting.
The ruling party plans to pass the amendment in the plenary session during this month’s extraordinary session of the National Assembly, aiming to strengthen local currency as a means to revitalize local economies in crisis. On the other hand, the People Power Party continues to oppose the bill, citing concerns such as a lack of tax revenue.
Seo Beomsoo, the People Power Party’s secretary on the Public Administration and Security Committee, pointed out, "The national finances are already under severe strain and tax revenue shortages are expected, yet mandatory national support for local gift certificates has been stipulated. I deeply regret that the tradition of cooperation and debate in the National Assembly has been undermined and that the bill was unilaterally pushed through based on numbers alone."
In response, Han Byungdo, a Democratic Party lawmaker, countered, "Right now, local small business owners and self-employed people are in a critical condition and need resuscitation. Since the nation still has some fiscal capacity, injecting a bit of support here could help revive consumer sentiment and benefit even the smallest self-employed business owners."
Kim Minjae, acting Minister of the Interior and Safety, stated, "The current economic situation is at least as bad as during the COVID-19 pandemic, and by some economic indicators, it is even worse. Therefore, the government believes it cannot leave this solely to local governments."
Regarding the Ministry of the Interior and Safety’s opposition under the previous administration, which was based on concerns about infringing on the government’s budget authority, Kim explained, "This amendment includes a provision that allows the ministry to adjust support based on the fiscal capacity of local governments. Therefore, any negative side effects of making financial support mandatory should be mitigated."
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