The Korea Local Administration Review

 We propose some policy ideas to overcome the restrictions on the introduction of local consumption tax based on VAT through the systematic investigation on the recent debates. We find that the costs of authorizing local tax autonomy for the local consumption tax would be greater than its benefits, even though the authorization is feasible. However, it is found that we are able to expect some net-benefits from the introduction of local consumption tax by employing a well-defined revenue distribution index. Finally, we suggest some policy ideas to overcome the problem of deterioration in both vertical and horizontal fiscal equalization that can be expected from the introduction of local consumption tax.