Briefed on "Gradual Expansion of Local Consumption Tax," President Lee Says "Local Fiscal Autonomy Must Be Strengthened" (Comprehensive)

President Lee Jae Myung chairs meeting with senior secretaries and aides on the 12th

Briefed on plan to bolster local government finances, including expanding the local consumption tax

"Local government finances are too rigid... We need to increase autonomy"

President Lee Jae Myung was briefed on the 12th on a plan to strengthen local governments' independent revenue sources by gradually increasing the share of local consumption tax revenue, Kang Yu-jeong, senior presidential secretary for public relations, said in a written briefing.

At a meeting with senior secretaries and aides that day, President Lee received a briefing from the Senior Secretary for Political Affairs' Office on the "Plan to Expand Local Government Finances for Locally Led Growth," which included these measures. The plan also included measures to "Reform State Subsidy Programs and Strengthen National Responsibility," with a focus on expanding the central government's responsibility for fire services, and to "Strengthen Accountability and Transparency in Local Government Finances" by tightening advance controls on fiscal management.

President Lee Jaemyung speaks about capital markets at a meeting with senior secretaries and aides at the Blue House on the 12th. Yonhap News Agency

The Senior Secretary for Political Affairs' Office told President Lee that, due to the real estate downturn, local government revenue was growing more slowly than national tax revenue, while expanded social welfare budgets were making fiscal management more rigid. It also said that local governments were covering revenue shortfalls by issuing local government bonds, worsening their budget deficits.

President Lee pointed out that "local government finances are far too rigid," and said, "We need to increase flexibility in fiscal management so that funds secured through budget savings can be used for other purposes, allowing savings to be put to different uses." He added, "Local governments need greater discretion and autonomy," and stressed, "If there are unreasonable or outdated aspects of rigid expenditures, they should be improved in a practical and realistic way. That is what expanding autonomy and managing finances autonomously means."

President Lee also said, "True innovation does not simply mean increasing financial support. It means actively attracting businesses and creating an environment in which local governments can secure their own sources of revenue," adding, "We need to establish a system of competition, even if that is not easy." In this regard, after calling for a review of whether the criteria for allocating local shared taxes are transparent and whether the formula for calculating ordinary local allocation taxes is too complicated, he said, "Rationality and predictability are important for all budgets."

In his opening remarks at the meeting, President Lee also emphasized the importance of locally led growth, saying, "We must foster strategic industries that maximize each region's distinct characteristics and strengths, and focus our policy capabilities on the fiscal and financial support and regulatory reforms they require." He also stressed that discussions should move forward quickly to strengthen local governments' autonomy and accountability and establish a stable revenue structure to support local finances.

Regarding the groundbreaking ceremony held that day for Samsung Electronics' Onyang campus in Asan, South Chungcheong Province, President Lee said, "The three mega-projects that will drive locally led growth and leapfrog growth in the Republic of Korea have now taken their first concrete steps in the Chungcheong region as well." He urged Cheong Wa Dae and the government to "seek creative and bold solutions that go beyond existing practices and constraints, so that projects in other regions can also move forward at speed."

President Lee Jae Myung speaks at a meeting with senior secretaries and aides at Cheong Wa Dae on Nov. 12, 2026. Yonhap News

President Lee also said, "We must step up efforts to foster the KOSDAQ market and innovate the venture capital ecosystem so that companies with innovative technologies and ideas can smoothly raise the capital they need at each stage of growth." He added, "Given the fundamentals of the macroeconomy and the competitiveness of our companies, the domestic market remains an attractively valued investment market."

"As everyone knows, the capital market is a key foundation for the sustainable growth of the Republic of Korea's economy," he said. "A greater economic leap will be possible only if we create a virtuous cycle in which the capital market supports corporate innovation and investment, drives the development of the national economy, and in turn is strengthened by that development."

"Fortunately, since our government took office, three amendments to the Commercial Act have improved corporate governance transparency and established various safeguards for protecting shareholder rights," he said. "But much remains to be done. We must not stop here; we need to redouble our efforts to transform our capital market into a trusted, advanced market with global competitiveness."

President Lee also stressed, "Rather than overreacting to short-term changes, we should focus more on creating an environment in which our capital market is properly valued. We must continue our institutional and policy efforts to ensure that the healthy development of the capital market leads to corporate growth and an increase in household wealth, and drives a major leap forward for the national economy."

He also called for the development and implementation of measures to enhance corporate value, increase shareholder returns, and promote long-term investment.

Regarding traditional industries, President Lee said, "In the automotive industry, which has a significant impact on both upstream and downstream sectors, I hope you will swiftly devise active and bold measures to secure the world's leading competitiveness in electric and autonomous vehicles." He added, "To ensure the Republic of Korea's economy and industries continue to innovate and advance, we must join forces to develop both traditional core industries and future-oriented advanced industries."

This content was produced with the assistance of AI translation services.