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There are few studies on tax assignment and revenue sharing at the subnational level. This paper discusses these important issues and tries to provide relevant policy recommendations for redesigning the intergovernmental assignment of revenue sources in Korea.
The demand for local expenditures has been increasing since local autonomy was introduced. However, there are still many local governments that are unable to meet basic demands. In this context, the primary purpose of this paper is to study the assignment of tax sources between national tax and local tax to amplify local finance. In particular, this paper studies the introduction of the local consumption tax.
For this study, I reviewed related literature and official government documents. After reviewing the results, I found alternatives to the introduction of the local consumption tax. The types of local consumption tax are as follows: first, the taxation type is tax sharing method; second, the size of distribution are parts (about 10%) of the value-added tax; third, the destination of the tax revenue is consuming district (Retail tax base, total expenditure within the region and population were chosen as the consumption index with which the regional consumption scale could be measured); fourth, the criterion of distribution is tax collection costs.
