Vice Minister of Economy and Finance: "5.4 Trillion Won Fiscal Decentralization to Local Governments Over 2 Years... 1 Trillion Won Support Annually for 10 Years"

2022 Budget Draft Nationwide Tour Before Formulation...First Stop Daegu·Gyeongbuk Visit
National Tax to Local Tax Ratio 77.7:22.3→72.6:27.4% by 2023...Local Tax Increase

Ando-geol, 2nd Vice Minister of the Ministry of Economy and Finance. (Photo by Yonhap News)

[Sejong=Asia Economy Reporter Moon Chaeseok] Ando Geol, Vice Minister of the Ministry of Economy and Finance, announced on the 3rd that "a second phase of fiscal decentralization policy worth 5.4 trillion won will be promoted by 2023."

On this day, Vice Minister Ando presided over a budget consultation meeting in the Daegu-Gyeongbuk region and made this statement. He plans to tour the country five times before drafting next year's budget, and this visit was the first.

At the meeting, Vice Minister Ando explained to local government officials that the second phase of fiscal decentralization worth 5.4 trillion won will be promoted by 2023.

Specifically, the plan includes ▲introducing a Local Extinction Response Grant ▲raising the local consumption tax rate ▲increasing the national subsidy rate ▲redistributing resources among local governments to reduce the gap between rural and urban areas.

First, a new "Local Extinction Response Grant" will be established, with the central government providing a fixed amount of 1 trillion won annually to local governments for 10 years. Regarding this, Vice Minister Ando evaluated, "The introduction of this system is significant as it establishes a new investment framework to fundamentally and mid-to-long term solve the problem of local extinction."

Additionally, the local consumption tax rate will be raised by 4.3 percentage points (p). Based on 2023, the tax base will increase by 4.2 trillion won. Ultimately, the local consumption tax rate will rise from 11% to 25.3%, an increase of 14.3 percentage points. As a result, the national tax to local tax ratio will improve from 77.7:22.3 in 2018 to 72.6:27.4 in 2023.

Furthermore, amendments to the Value-Added Tax Act and Local Tax Act necessary for fiscal decentralization measures will be processed in this regular National Assembly session to be implemented from January next year.

Vice Minister Ando also explained the investment outcomes of major regional development policies such as the national balanced development policy, regional balanced New Deal, and living SOC, along with the direction of budget support for next year. The budget for the national balanced development project, which is 700 billion won this year, will be significantly expanded. In the case of living SOC, support will be provided to ensure the achievement of the investment target of 30 trillion won from 2020 to 2022 without disruption.

He also toured the Gumi Smart Green Industrial Complex and held a meeting. At this meeting, he announced that support will be provided to fully promote the Gumi Smart Green Industrial Complex project, which has invested 69 billion won (16.5 billion won in national funds) by 2023.

He conveyed a message urging special attention to prevent industrial accident occurrences. Vice Minister Ando said, "I hope that safety vulnerabilities within the industrial complex, including tenant companies, will be thoroughly inspected to prevent industrial accidents," and added, "I ask all agency heads and staff to cooperate so that the government's recently announced 'Emergency Protection Measures for Workers against Heatwaves' work well on site."

The government has announced measures to suspend construction work from 2 to 5 p.m. and to halt national and public institution-commissioned construction projects during heatwave periods.

This content was produced with the assistance of AI translation services.