Government and ruling party review measures to expand fiscal autonomy amid controversy over reduction in local allocation tax

The government and the ruling party are reviewing ways to expand local governments' fiscal autonomy amid the controversy over reduced local subsidies that arose during the process of securing funding for the Future Response Fund. At a partygovernment meeting on the Future Response Fund held on the 29th at the National Assembly members' office building, governors and mayors affiliated with the Democratic Party of Korea attended and discussed the issue of reduced local finances caused by changes to the subsidy calculation method. The governors and mayors requested adjustments to the subsidy rate, saying the impact is greater in regions with lower fiscal selfreliance. The government plans to establish a new Future Response Fund worth 162.3 trillion won by using increased tax revenues from the semiconductor boom, but it has come under criticism because the fund resources are first deducted from national taxes before calculating local subsidies, which could reduce local subsidies compared with before. The government explained that the support scale will not decrease through local accounts and local future growth support funds, and the ruling party and the government are leaving open the possibility of revisions and supplements during the National Assembly review process.