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A Study on the Establishment of Fiscal Decentralization Policy of Seoul in Response to the Second Stage of Fiscal Decentralization

Ga-Hui ShinㆍSeong-Moon Park

The purpose of this study is to analyze the impact of the second stage fiscal decentralization policy on the finances of the Seoul. In addition, based on the analysis results, the Seoul Metropolitan Government's fiscal management strategy is prepared. The second phase of the fiscal decentralization policy is expected to increase the local consumption tax rate (4.3 percentage point). Also, 2.3 trillion won in government subsidies will be transfered to local governments. As a result of the analysis, Seoul's finances are expected to net increase by at least 280 billion won and up to 526 billion won due to the second stage of fiscal decentralization. In response to the second phase of fiscal decentralization, the Seoul Metropolitan Government should reorganize the Local Adjustment Grants in Seoul. Second, the Seoul Metropolitan Government should introduce a co-budget system with the education office in local. Finally, it is necessary to strengthen the Seoul Metropolitan Government's ability to carry out projects in response to the transfer of government subsidies to local governments.