South Korean local leaders warn of budget cuts due to new fund

Local government leaders in South Korea are expressing significant concern over the central government's plan to establish a ‘future response fund,’ which may lead to a reduction in local allocation taxes.

In Ganghwa County, Mayor Park Yong-cheol stated he would respond immediately if the county's budget is cut due to the new fund. He highlighted that Ganghwa faces existing disadvantages, such as being classified under the Metropolitan Area Readjustment Planning Act, which limits regional development support despite its proximity to North Korea. Park is advocating for the designation of the area as a Peace Economic Special Zone and a Free Economic Zone to drive growth.

In Gangwon State, Provincial Assembly Member Park Ki-young warned that using local allocation taxes to fund the national future response fund could undermine local financial autonomy. Projections suggest that if the government's plan is implemented, local allocation taxes could drop from an estimated 98.1 trillion won to 68.5 trillion won, a decrease of approximately 29.6 trillion won. Park urged Gangwon State to conduct a detailed impact analysis and coordinate with other provinces to demand compensation for the projected revenue losses from the central government and National Assembly.