The Korea Local Administration Review

The Moon Jae-in government implemented the following measures as a measure for fiscal decentralization: increasing the local consumption tax rate (11% → 25.3%), adjusting the statutory grant rate for fire safety grant tax (20% → 45%), establishing the local extinction response fund, and introducing the special accounts for joint projects between local governments and local offices of education, etc. These measures have the characteristics that Enhance the autonomy of local governments’ fiscal management through net expansion of local revenues, prepare the vitality mechanisms for stagnant regions, promote the comprehensive reform of local finance, apply the solidarity and cooperation between related sectors, and establish a link between general local finance and local education finance, etc. The fiscal decentralization of the Moon Jae-in government is expected to serve as a reference for setting the direction for the government’s fiscal decentralization in the future as it inherits the achievements of previous governments and reflects the changed conditions. In the future, as major tasks for fiscal decentralization, the government must consider expanding and reorganizing the base of local revenues, improving local tax expenditure operations, strengthening the linkage and cooperation between local finance and local education finance, and seeking the customized fiscal decentralization etc.
In addition, it is necessary to create conditions for the fiscal decentralization plan to work as a practical mechanism through the revision of the related legal system.