Attended the 9th Central-Local Cooperation Meeting on the 12th
Points Out: "Expansion of Local Consumption Tax Deepens Metropolitan Concentration"
Kim Youngrok, Governor of Jeonnam Province
Kim Youngrok, Governor of Jeonnam Province, strongly advocated for the need to focus fiscal decentralization on local allocation tax during the 9th Central-Local Cooperation Meeting held at the Presidential Office in Yongsan on November 12.
The meeting was attended by the President, the Prime Minister, governors of 17 provinces and metropolitan cities, and key ministers, with the main agenda focusing on the direction of fiscal decentralization between the central and local governments. In particular, President Lee Jaemyung reportedly expressed strong agreement regarding the discussion on fiscal decentralization through the expansion of local allocation tax.
During the meeting, Governor Kim emphasized, "We must transition to a decentralization structure centered on local allocation tax so that local regions can thrive and the nation can grow together."
He went on to point out, "The expansion of local consumption tax favors the Seoul metropolitan area and large cities, where population and consumption are high. The local consumption tax is a system that allocates a certain percentage of value-added tax to local governments, so regions with larger populations and higher consumption receive more tax revenue. If the local consumption tax rate increases, national tax revenue decreases, which in turn reduces the local allocation tax, causing a negative side effect."
He further explained, "Cities and counties are not originally included in the distribution of local consumption tax, which actually worsens their fiscal conditions."
To address these issues, he stressed the necessity of fiscal decentralization centered on local allocation tax.
Governor Kim stated, "The local allocation tax is the most rational fiscal decentralization system to alleviate concentration in the metropolitan area and achieve regional balance. By increasing the allocation tax rate, we can strengthen the self-reliance of non-metropolitan cities and counties, leading to a more equitable distribution of local finances."
He added, "The core of local decentralization is not simply the transfer of authority, but the expansion of a fiscal self-reliance base to support it. I hope this discussion on fiscal decentralization will become a turning point toward genuine balanced development, moving beyond a metropolitan-centered structure."
Jeonnam Province has continuously proposed to the government and the National Assembly practical measures to improve fiscal decentralization, including a 5 percentage point increase in the local allocation tax rate and the expansion and permanent operation of the 3 trillion won Local Extinction Response Fund.
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