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The central government has drawn up a plan to help the nation's local governments generate
more revenues and finance increased welfare services.
The local authorities can now levy higher consumption taxes in their districts,... but
they are seeking more.
Yoo Li-an reports.
Economic policymakers on Tuesday released a set of measures to support local governments
which have been under mounting financial burden.
The problems at the local government have worsened since the central government expanded
the country's free child care system and lowered an acqusition tax to revitalize the housing
market earlier this year.
Now the central government says it will increase state subsidies for free daycare services
-- by 10 percentage points from its current ratio.
That means the central government will soon be covering 30-percent of the total cost in
Seoul and 60 percent for other regions.
"We are making up for a shortfall in the local governments' revenues caused by last month's
comprehensive real estate measures. We will also ease their financial burden heightened
by the free child care services."
To make up for the shortfall in tax revenues caused by a cut in home acquisition tax,..
the local governments will be allowed to increase their consumption tax.
The consumption tax will gradually increase from the current five-percent to eleven-percent
by 2015,... which will create new revenues of about two-point-six trillion won or two-point-two
billion U.S. dollars.
Yoo Li-an, Arirang News.