North Gyeongsang Province's 22 Mayors and County Heads Call for Changes to Future Response Fund

【Financial News, Gyeongju—Reporter Kim Jang-wook】"The Future Response Fund must not infringe on local fiscal autonomy."
The 22 mayors and county heads of North Gyeongsang Province voiced a unified position on the government's establishment of the Future Response Fund and reform of the Local Grant Tax.
The North Gyeongsang Mayors and County Heads Council issued a statement on the 21st, urging the government and National Assembly to establish a system that guarantees the Local Grant Tax and allows local governments to manage their finances autonomously.
In its 2027 budget proposal announced on the 1st, the government said it plans to establish the approximately 162 trillion-won Future Response Fund and use tax revenues collected above projections and other sources to finance it.
Of this amount, approximately 53 trillion won is planned to be allocated to four major areas: youth, growth engines, local communities, and education and talent.
The Council supported the strategic investment aimed at future generations but expressed concern that local governments' own-source revenue could decline if domestic tax revenues allocated as Local Grant Tax were incorporated into the fund.
In particular, it estimated that the ordinary Local Grant Tax allocated to the 22 cities and counties in North Gyeongsang Province would decline by approximately 4.5 trillion won next year compared with the current system if the Future Response Fund is introduced.
It also estimated that, if the Future Response Fund's revenue accumulation system is introduced, next year's ordinary Local Grant Tax would decline by approximately 30.5 trillion won nationwide and by approximately 4.5 trillion won in the 22 cities and counties of North Gyeongsang Province.
The Council noted that such reductions could lead to deteriorating local finances, including cuts to administrative services directly linked to residents' lives and the additional issuance of local bonds.
Joo Nak-young, chair of the Council and mayor of Gyeongju, said, "The Local Grant Tax is a key source of own-source revenue for administrative services directly linked to residents' lives. Transferring funds intended for local governments into a central government fund and then reallocating them does not align with the government's policies of a 'Local Era' and 'locally led growth.' The 22 cities and counties in North Gyeongsang Province will respond jointly to protect their fiscal autonomy," he stressed.
The Council called on the government and National Assembly to redesign the Future Response Fund by guaranteeing statutory Local Grant Tax funding first and ensuring that local governments' own-source revenue is not infringed upon; consult sufficiently with local governments before implementing institutional changes; and establish a separate Local Development Fund with an operating framework centered on a consultative body representing local governments, while guaranteeing local governments' autonomous decision-making authority.
Meanwhile, the statement was issued jointly in the names of Council Chair Joo Nak-young and the heads of the 22 cities and counties in North Gyeongsang Province.

[email protected] Kim Jang-wook Reporter