논문

This study deals with the intergovernmental fiscal relations in Korea. Especially we have focused on three kinds of intergovernmental fiscal coordination system - local share tax, local transfers, and national subsidies. Although many limitations on and remedies for this system have been derived from many studies, almost all of them have been abstract and superficial. In this paper we have tried showing empirical evidences and suggesting remedies which can be applied in the real world.
In the case of local share tax, there has been great emphasis on the introduction of tax effort in the allocation formula. However the fact that introducing tax effort is likely to impair the horizontal equity of local public finance has been overlooked. We have suggested a method where both horizontal equity and tax effort can be enhanced, which utilize the growth rate of current non-tax revenues. To examine whether the legal share ratio, which is 13.27% of total internal taxes, is optimal, we have set the target of ratio of self-reliance and derived the direction and size of change in the present legal share ratio. In case of special share tax, its fiscal equalizing effect is much weaker than that of ordinary share tax, which provide a rationale for incorporating two kinds of share taxes. When 3 factor formula originated from the general revenue sharing system in the US is applied to Korean data, it is shown that the existing local share tax has weaker fiscal equalizing effect than the newly calculated local share tax, which suggest that a simpler and superior formula could be devised.
In the case of local transfers, since its fiscal equalizing effect is weaker than that of local share tax, it is suggested that the modification index include a term reflecting local fiscal capacity. In the case of national subsidies, introduction of incentive system is proposed to carry out the subsidized projects more efficiently.
Finally two new systems are investigated. The tax sharing system seems to have no outstanding merit compared with our existing system. However 2-step local share tax is feasible and has high probability for success. This may induce the introduction of negative grants system among cities and counties in a great-sphere self-governing body in the future.