Basic Report

The purpose of this study is to analyze the relationships between general share tax and fiscal expenditure in local governments. Based on the results, this study suggest the improvement plan of the standard financial demand of local share tax using a panel data of local governments. The local share tax is an unconditional grants. Which is granted to local governments based on the amount of deficit between standard financial demand and estimated standard financial revenue. The local share tax has an absolute majority in the local allocation tax and it is a very important resource of local governments. Also, it has a significant portion of local finance system.This study conducted an empirical analysis in order to make a reform for the standard assessment of local share tax. First, this study investigated into the actual condition of local finance for deeper analysis of changing environment of local finance system. This study analysed the local welfare financing problem, which field has been happening the biggest change on the operation of financing. Second, analyzed the basic characteristics of demanding variables in order to assess the local share tax. Third, analyzed the relationships between standard administrative demand measurement items and financial demand. This relationships is the basis of the assessment of the basic demand. Lastly, analyzed the reduction effect of fiscal disparities on local governments, which is the main aim of the local allocation taxBased on the analysis, this analysis suggests the improvement plan of allocation method of local share tax. First, changing environment of local finance system should be considered on the allocation of local share tax. Especially, welfare financial demand, which has been continuously increasing, should be considered. Second, actualization of measurement items, which measure the local governments’ basic demand, should be need. These items should reflect the changing environment of local finance system. Lastly, city governments and count governments are placed on the different situations. So, discriminatory calculating formula should be applied.