The local autonomy system of our country has developed through trial and error. However, it is difficult to see that the ideal local autonomy is still in full swing. It's because the success of local autonomy depends on the prosperity of the local economy and the stable and efficient operation of the local governments, but the reality of poor local finance makes them more dependent on the transfer revenue of central government.
Based on 2017's Original budget , municipalities that can not handle the labor costs with their local tax income reached 125 (51.4%) of the total 243, and also, 71(29.2%) municipalities of them are not able to pay the labor costs with their own income. The ratio of revenue budget on central and local governments is 7:3, but in case of the expenditure budget is 5:5.
These financial problems of municipalities can be found in the financial structure concentrated on the central government. Local taxes, which are the most important income of local governments, are fixed at a rate of 8:2 compared with national tax.
In order for local governments to handle the welfare affairs under their own responsibility, financial self-determination is essential. To guarantee these self-determination rights, the Constitution recognizes the right of local governments to carry out their regional affairs under their own responsibility. However, because the central government has the authority to amend the laws related to local taxes, there is a limit to the finances that local governments can prepare themselves.
Securing the Independent financial resource of local finace to stabilize the local autonomy system is a prerequisite for the welfare enhancement of the local residents. To this end, I propose an expansion plan focusing on the local resource tax and the local consumption tax, which are self-funded local taxes.