Local Government Budget 326 Trillion Won, Increased by 16 Trillion Won from Last Year but...

Both Own Revenues and Transfer Revenues Increase
Concerns Persist Over Crisis-Level Fiscal Independence
Budget Support Decreases Due to Tax Revenue Shortfalls and Other Reasons

This year, the total budget of local governments nationwide was recorded at 326 trillion won, a 5.1% increase compared to the previous year. This is the result of increases in both local tax revenues and transfer revenues such as grants.

On the 11th, the Ministry of the Interior and Safety announced that the total budget for local governments in 2025, including net accounts and general and special accounts, increased by 15.9 trillion won from last year to 326 trillion won.

Provided by the Ministry of the Interior and Safety

By revenue source, local revenues (local taxes + non-tax revenues) amounted to 145.6 trillion won, transfer revenues (local allocation tax + national subsidies) were 150.9 trillion won, compensation revenues were 23.6 trillion won, and local bonds were 5.9 trillion won. Local revenues increased by more than 7 trillion won compared to last year (138.2 trillion won), and transfer revenues also rose by 6.9 trillion won from last year (144 trillion won).

The financial independence ratio of local governments remained at 48.6%, the same as last year. The financial autonomy ratio, an indicator of discretionary power in resource use, was 70.3%, a decrease of 0.6 percentage points compared to the previous year.

However, some voices continue to point out that the financial independence of local governments is at a crisis level. According to the National Assembly and others, although this year’s level is similar to last year’s, it is the lowest in the past decade. The situation is worse in local areas. As of last year, special cities and metropolitan cities had a relatively high ratio of 57.7%, but provinces were at 36.6%, cities at 31.5%, autonomous districts at 28.1%, and counties at 17.2%, showing worsening conditions as one moves to more local levels.

There are also claims that the predictability and stability of local finances are both threatened as the central government suddenly reduces the budget it originally planned due to reasons such as tax revenue shortfalls. According to an analysis by the National Assembly Budget and Accounts Special Committee in January on the reduction scale of local allocation tax by city and province due to the re-estimation of last year’s national tax revenue, the local allocation tax (general allocation tax, fire safety allocation tax) distributed by the central government to local governments is expected to be cut by 2.2 trillion won, and local grants distributed to local education offices are expected to be reduced by 4.3 trillion won.

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