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A Study on Legal Control of Local Fiscal Crisis

  • Public Land Law Review
  • Abbr : KPLLR
  • 2012, 59(), pp.285-310
  • Publisher : Korean Public Land Law Association
  • Research Area : Social Science > Law

Jae-Ho Kim 1

1충남대학교

Accredited

ABSTRACT

The Article examines the causes of local fiscal crises and explores the solutions to prevent or deal with them properly from the perspectives of the structural and operational aspects of local administration. In order to maintain the local fiscal integrity, it is very important to secure financial autonomy and grants from the central government. There are many ways of obtaining this goal. First, localities should be given the power to tax based upon ordinances. Second, it should considered to raise the ratio of local consumption tax from 5% to 10%. The first and second solutions contribute to broadening the tax base of the local governments. In addition, it is desirable that the expense of social welfare services come from the purse of the central government, and that block grants, rather than matching funds or conditional grants, be more regular. Third, the central government should refrain from transferring its powers to localities on a broad scale. Fourth, popular control on the expenditures of mayors or governments, through the local assembly or by the residents, must be more utilized and vitalized under the Local Autonomy Law. The third and fourth solutions address the operational aspects of local administration. Furthermore, the central government can control the finances of the local governments by introducing a local fiscal crisis pre-warning system. Under this kind of system, the locality under financial stress is required to establish and implement a plan to secure fiscal integrity within the time period prescribed in exchange for support and supervision from the central government. Finally, the Bankruptcy Law must be revised to allow it to apply to the local governments, in order to deal with the case of a financial crisis and protect the creditors and residents.

Citation status

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