The Korea Local Administration Review

The Si-Gun(or City-County) Adjustment(SGA) Grant is the Provincial Government’s general grant not only for mitigating vertical fiscal gaps between provinces and Si-Gun but also for the purpose of mitigating interregional fiscal disparities. This study tries to answer whether the SGA grant mitigates interregional fiscal disparities among Si-Gun. We apply the Regression Based Inequality Decomposition(RBID) method and decompose the source of disparities by revenues. The results of the analysis are as follows. Abolishing the distribution system would improve fiscal disparities among Si-Gun. And the fiscal equalization effects become more pronounced as we increase the fiscal condition application ratio for the distribution system, However, it is also confirmed that the effect of improved fiscal equality is not in proportion to the fiscal condition application ratio, and that the fiscal equality may be lowered when the application ratio of fiscal condition exceeds 50%. This implies that the appropriate level of the fiscal condition application ratio should be judged on an empirical basis within the framework of intergovernmental fiscal relations.

□ Keywords: RBID(Regression Based Inequality Decomposition), Adjustment Grant, Local Share Tax, Fiscal Equalization