Six Gyeonggi Province Mayors Call for Withdrawal of Local Finance Reform

Six local government heads from Suwon, Yongin, Seongnam, Goyang, Hwaseong, and Gwacheon—opposing the government's local finance reform initiative—visited the National Assembly on the 11th to urge a halt to the reform push.

The six mayors—Suwon Mayor Yom Tae-young, Yongin Mayor Jung Chin-min, Seongnam Mayor Lee Jae-myung, Goyang Mayor Choi Sung, Hwaseong Mayor Chae In-seok, and Gwacheon Mayor Shin Gye-yong—held a joint press conference at the National Assembly's press hall in Yeouido, Seoul, arguing that "if the implementation plan proceeds, all six cities will face budget cuts of over 800 billion won each, leading to fiscal collapse."

The mayors stated that "proceeding unilaterally with local finance reform without any consultation with the affected local governments is a disregard for local autonomy and decentralization," and demanded that "to secure the soundness of local finances, expanded autonomous finance must be a prerequisite. The government must immediately implement the phased expansion of the local consumption tax rate promised in 2009, raise the local transfer tax rate, and reduce tax exemptions and reductions."

Seongnam Mayor Lee Jae-myung said, "They say the six cities are wealthy and should share money, but we are not wealthy—we merely have revenue that slightly exceeds essential expenses," adding that "the government, which has caused deterioration in local finances by shifting fiscal burdens, is now pitting local governments against each other and evading responsibility."

Hwaseong Mayor Chae In-seok stated, "Hwaseong will lose 270 billion won due to the implementation plan, making it the most severely affected," emphasizing that "if the government lays hands on the purses of the five million citizens represented by the local governments gathered here, it will face enormous resistance."

The mayors demanded immediate withdrawal of the implementation plan, fulfillment of financial expansion promises, and called for the Gyeonggi Province governor to lodge strong protests with the government and actively engage in finding solutions. They indicated their intention to take joint measures including protest visits to the Ministry of Interior and Safety and petition campaigns.

The Ministry of Interior and Safety unveiled its implementation plan on the 22nd of last month at a state finance strategy meeting, focusing on reducing fiscal disparities between local governments by converting approximately 50% of the corporate local income tax—a city and county tax—to provincial tax from 2018 onward, redistributing it to cities and counties, and revising the allocation method of adjustment grants to favor financially disadvantaged cities and counties.

In response, local governments that collect substantial corporate local income tax are protesting, arguing that "arbitrarily distributing local government revenue undermines the foundation of local autonomy."