Gyeongbuk Province requests restraint in cash support in preparation for KRW 4.5 trillion reduction in local allocation taxes

Compared to a 4.5 trillion won decrease in local allocation taxes... Prioritize jobs, corporate investment, etc.

(Andong = Yonhap News) Reporter Seunghyeong Lee = Gyeongbuk Province requested cities and counties to refrain from organizing or expanding new cash support projects in order to respond to the local financial crisis and invest limited financial resources into productive areas.

According to Gyeongbuk Province on the 29th, the average financial independence of provinces, cities and counties decreased from 25.3% in 2023 to 23.5% in 2026. In addition, as the local allocation tax reform and the establishment of the future response fund overlap, the local allocation tax is expected to decrease by approximately 4.5 trillion won.

The province believes that cash support will increase residents' perceived satisfaction in the immediate future, but in the long run, it will erode available financial resources and discourage investment in future growth engines. Also, if it is introduced once again, it is likely to become a fixed expense that is difficult to reduce or abolish due to opposition from beneficiaries.

In this case, we may even lose the ability to respond to emergency financial needs such as a large-scale disaster or sudden economic downturn.

Accordingly, the province plans to reduce and reorganize cash support projects and focus its financial resources on creating quality jobs and future growth engines.

We plan to encourage sound and productive financial execution, such as differentiating the scale of support depending on the financial management direction of the city and county.

The province, along with cities and counties, plans to jointly respond to the financial burden caused by the government's new Future Response Fund and local allocation tax reform and discover projects that can be linked to the Future Response Fund.

Lee Cheol-woo, governor of North Gyeongsang Province, said, “In a situation where local financial conditions are not easy, how limited financial resources are invested determines the future of the region.” He added, “Cities and counties should also reduce unnecessary cash spending and prioritize allocating financial resources to areas for sustainable growth, such as jobs and corporate investment.”