Democratic Party's Regional Assembly Cooperation Urges Central Government on Four Fiscal Decentralization Items

The Democratic Party's National Regional Assembly Members Cooperation (represented by An Gwang-ryul, Gyeonggi Province Assembly) urged the central government on the 9th to implement four major institutional improvements for the realization of fiscal decentralization in local governments.

The cooperation held a press conference at the provincial assembly on that day, stating "Local governments face a dire situation where they must incur debt to manage their budgets amid the national crisis of tax revenue deficits, demographic structural changes, and the disappearance of local communities, compounded by the increased burden of matching projects from the central government."

The group continued, "In accordance with the principle of autonomous decentralization that 'resources should follow authority,' we must abandon the central-dependent '20% autonomy' structure and immediately undertake four major fiscal institutional improvements."

As the first fiscal institutional improvement demand, the cooperation called for the withdrawal of attempts to reduce local transfer taxes due to the establishment of a future response fund.

If the government deducts the future response fund allocation from internal national taxes before calculating transfer taxes, local transfer taxes would decrease by approximately 30.5 trillion won by 2027. The cooperation demanded the withdrawal of the revised statutory rate (19.24% of internal national taxes) calculation standard and the distribution of the fund's local share as general revenue.

Following that, the cooperation also urged 50% national direct subsidy for firefighters' salaries and wages. The cooperation emphasized that even after the conversion of firefighters to national civil servants, the enormous burden of salaries and wages continues to constrain local governments, and the nation must subsidize at least 50% of salaries and wages with national funds to provide relief for reinvestment in fire safety infrastructure.

Thirdly, the cooperation demanded an additional 5% increase in the local consumption tax rate and a phased expansion to 40.3%. The group ordered that the local consumption tax rate, which has remained at 25.3% since 2023, be increased by at least an additional 5% and phased up to 40.3%, with a mid-to-long-term roadmap to be processed expeditiously in the current regular parliamentary session.

The cooperation urged the prompt realization of a '7 to 3' ratio between national and local taxes for fiscal decentralization. The group argued that the current national and local tax structure, which remains at a '75 to 25' level, should be improved to promptly present specific implementation plans and timelines for the promised '7 to 3' fiscal decentralization.

The press conference on that day was conducted by Gyeonggi Province Assembly Chief Political Secretary Yu Kyung-hyun, and was attended by An Gwang-ryul, cooperation representative (Gyeonggi Province Assembly), Kim Myeong-ju, executive secretary (Incheon Metropolitan Assembly), and Park Jung-hee, spokesperson (Daegu Metropolitan Assembly).