Party and government discuss ways to operate the future response fund... Concerns raised about local allocation tax adjustment

On the 29th, the party and government held a meeting of the party-government council on the Future Response Fund at the National Assembly and discussed ways to operate the fund.

The party-government council meeting held on this day, held with the attendance of Minister of the Interior and Safety Yun Ho-jung, Minister of Planning and Budget Park Hong-geun, and party leaders, was held in an atmosphere where the concerns of heads of metropolitan local governments belonging to the Democratic Party of Korea were actually conveyed.

While preparing next year's budget, the government decided to establish a new future response fund worth 162 trillion won.

It was decided to use additional tax revenue to finance the fund, but also adjust the local allocation tax parameters.

Concerns have been raised in local governments that this may lead to a decrease in local allocation taxes.

Initially, there was an expectation among local governments that semiconductor tax revenues would increase significantly and the overall size of local allocation taxes next year would also increase.

Reflecting this, Incheon Mayor Park Chan-dae, chairman of the Provincial Governors' Association, said at the council, "The direction of reducing tax revenue volatility according to the semiconductor cycle and investing in future growth engines through stable financial management is a meaningful decision, but the region is where the future is created."

Mayor Park said, “The effect of the fund will be greatest when the country’s future response and the region’s future response are aligned in one direction rather than separately,” and asked, “Please look into the Future Response Fund to ensure that it also provides solid support for regional future preparations.”

He continued, "Local governments with lower levels of financial independence have a greater impact on even small changes," and added, "We look forward to discussing adjusting the grant tax rate in line with the direction of fiscal decentralization, which is a government task."

Accordingly, Minister Park worked hard to dispel the concerns of local governments.

Minister Park said, “I deeply sympathize with the worries and concerns of city and provincial governors as we adjust the parameters of local allocation taxes linked to domestic tax revenues in the process of establishing a new fiscal framework,” and added, “Support for local governments will never become thinner.”

Minister Park said, “We will foster regional industrial bases through three major mega projects and the establishment of ultra-wide special accounts, and improve settlement conditions such as education and medical care by nurturing local talent and establishing special accounts for regional essential medical services.”

He added, “We will expand investments that can actively respond to local demands, and we will give priority to the voices of local governments during discussions at the National Assembly.”

Kim Min-seok, leader of the Democratic Party, also expressed sympathy with the concerns of local governments and expressed his determination to find a solution.

Representative Kim said, “Not all of the current increase in national tax revenue is accumulated in the Future Response Fund,” and added, “I will listen to your comments to ensure that local issues are faithfully reflected in the Future Response Fund and next year’s budget.”