논문

This paper examines the influence of the Korean War on the local public finance in Korea. Topics under focus include: the emergency tax system during the war; the process of the introduction of the “(Temporary) Local Allocation Tax”; and the development of the "Local Allocation Tax" after the war.
The relative share of all tax revenues changed fundamentally to finance the war effort, resulting in a new inter-government fiscal relations that continues to exist today. The “Temporary Local Allocation Tax” was introduced to compensate for a deficiency of local revenue in F.Y. 1951. The fund was composed of surtaxes originally imposed by local authorities. The system was reformed and renamed to the “Local Allocation Tax” in 1952. The additional taxation authority acquired by the central government could not be returned fully to local government after the war due to the increased expenditure, and the law could not be abolished because of the political pressure.
The system may be said to have been the major factor in resolving vertical and horizontal fiscal imbalances. However, the law was not introduced to solve social tension caused by the difference of burden or administrative service among local jurisdictions.