Concerns have emerged within the ruling party regarding the potential for the establishment of a Future Response Fund to exacerbate financial instability among local governments.
A seminar held by the Democratic Party's Good Local Government Committee on September 17 at the National Assembly focused on discussions surrounding the possible reduction of local allocation taxes due to the creation of the Future Response Fund.
Yum Tae-young, chair of the Good Local Government Committee, emphasized, "If changes in national finances lead to instability in local finances, the burden will inevitably fall on local governments and residents." He stressed the need for local governments to secure substantial financial sovereignty.
During the seminar, a proposal was made to prioritize the calculation of local allocation taxes in the distribution of excess tax revenues, with a portion of the funds allocated to the Future Response Fund from resources belonging to the central government. There were also calls to establish a legal limit on the fund's expansion to prevent unlimited growth.
On September 1, the government announced a funding plan that prioritizes the allocation of excess tax revenues from the semiconductor sector to the Future Response Fund. According to this plan, local allocation taxes are expected to decrease by approximately 30.5 trillion won nationwide.
Democratic Party governors, including Woo Sang-ho of Gangwon Special Self-Governing Province and Heo Tae-jeong of Daejeon, have publicly expressed their opposition. Governor Woo urged the government to devise measures, stating on September 14 at a Gangwon budget policy meeting, "If the Future Response Fund is not utilized significantly, we will not only miss out on the benefits of excess tax revenues but also face a decrease in tax revenues." Mayor Heo, while acknowledging the fund's purpose during a Daejeon budget policy meeting on September 16, requested that it not hinder local economic revitalization.
Meanwhile, the Good Local Government Committee plans to gather local governments' opinions on the changes to local allocation taxes resulting from the introduction of the Future Response Fund and relay them to the party leadership.
A seminar held by the Democratic Party's Good Local Government Committee on September 17 at the National Assembly focused on discussions surrounding the possible reduction of local allocation taxes due to the creation of the Future Response Fund.
Yum Tae-young, chair of the Good Local Government Committee, emphasized, "If changes in national finances lead to instability in local finances, the burden will inevitably fall on local governments and residents." He stressed the need for local governments to secure substantial financial sovereignty.
During the seminar, a proposal was made to prioritize the calculation of local allocation taxes in the distribution of excess tax revenues, with a portion of the funds allocated to the Future Response Fund from resources belonging to the central government. There were also calls to establish a legal limit on the fund's expansion to prevent unlimited growth.
On September 1, the government announced a funding plan that prioritizes the allocation of excess tax revenues from the semiconductor sector to the Future Response Fund. According to this plan, local allocation taxes are expected to decrease by approximately 30.5 trillion won nationwide.
Democratic Party governors, including Woo Sang-ho of Gangwon Special Self-Governing Province and Heo Tae-jeong of Daejeon, have publicly expressed their opposition. Governor Woo urged the government to devise measures, stating on September 14 at a Gangwon budget policy meeting, "If the Future Response Fund is not utilized significantly, we will not only miss out on the benefits of excess tax revenues but also face a decrease in tax revenues." Mayor Heo, while acknowledging the fund's purpose during a Daejeon budget policy meeting on September 16, requested that it not hinder local economic revitalization.
Meanwhile, the Good Local Government Committee plans to gather local governments' opinions on the changes to local allocation taxes resulting from the introduction of the Future Response Fund and relay them to the party leadership.
* This article has been translated by AI.
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