Decrease in national tax revenue and slowdown in real estate transactions
Focus on efficient operation by reducing repetitive expenses
Social welfare and cultural tourism expenditures increase
Last year, local government revenue settlement amount was calculated to be 385.6 trillion won, down 9 trillion won (2.3%↓) from fiscal year 2022. Due to a decrease in national tax revenue and a slowdown in real estate transactions, local allocation taxes decreased by 13.6 trillion won (16.8%↓) and local taxes decreased by 6.1 trillion won (5.2%↓). However, due to the increase in additional financial resources such as non-tax income (up 1.8%, KRW 500 billion) and fund transfers (up 102%, KRW 2 trillion), the decrease in tax revenue settlement amount was limited to KRW 9 trillion.
The Ministry of Public Administration and Security announced the 2023 fiscal year settlement results for 243 local governments on the 27th. The Ministry of Public Administration and Security explained, “Local governments have focused on efficient financial management to ensure that the local economy and the welfare of the vulnerable do not shrink even in difficult tax revenue conditions.”
The expenditure settlement amount recorded 316.5 trillion won, down 2.3 trillion won (0.7%↓) from the 2022 fiscal year. As tax revenues decreased significantly, expenditures in general administrative expenses, which are current expenses, were reduced (25.6%↓, KRW 7.5 trillion) and in the health sector following the end of COVID-19 (23.8%↓, KRW 1.7 trillion). Instead, financial resources were invested in administrative services closely related to residents’ lives, such as social welfare (up 3.1%, KRW 2.9 trillion) and culture and tourism (up 10.4%, KRW 1.6 trillion).
The surplus in the settlement of accounts, which is calculated by subtracting the expenditure settlement amount from the revenue settlement amount, is 69 trillion won, a decrease of 9.0% (6.8 trillion won) from fiscal year 2022. Among these, the net world surplus excluding carryovers (43.8 trillion won) is 25.2 trillion won.
As the proportion of self-revenue in local government resources increased due to a decrease in local grants, the degree of financial independence rose by 2.66 percentage points to 52.55% last year from the previous year. On the other hand, financial independence was 75.60%, down 0.01 percentage points from the previous year.
Last year, the assets of local governments were calculated to be 1489.3 trillion won (up 2.0%, 29.4 trillion won), and liabilities were 65.7 trillion won (up 4.3%, 2.9 trillion won). The debt-to-assets ratio was 4.4%, down 0.3 percentage points from fiscal 2022, and financial soundness improved despite the decrease in tax revenue.
The fiscal year 2023 financial disclosures for local governments will be made public through Local Finance 365 on the 31st.
Reporter Kim Tae-kyung
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