논문

The purpose of this paper is to find ways to mitigate the horizontal fiscal
inequality that exists among the similar levels of local governments in Korea,
focusing mostly on the Districts in the capital city, Seoul. The phenomenon of
fiscal inequality among the different levels of governments has prevailed across
the nation during the last decades, and it has not been solved yet at a
satisfactory level. Traditionally, in Korea, fiscal inequalities existed not only in a
vertical, but also, horizontal context. The vertical fiscal inequality is mostly
featured between the central government and local governments, whereas
horizontal inequality is mostly characterized among the same levels of local
governments.

To examine the situation more clearly from the current perspective, first of all, this
paper tries to analyze the vertical and horizontal inequalities in a macro
perspective by utilizing the relevant statistics and information on local finance. In
addition, this paper tries to delve into a specific situation of fiscal inequality
among the districts in Seoul Metropolitan Government in various ways.

Following the analysis, this paper briefly reviews the current intergovernmental
fiscal transfer systems in Korea and discusses the limitations and the problems of
the current intergovernmental fiscal transfer system. After this, the paper deals
with a recently submitted proposal for a tax swap between the Seoul Metropolitan
City Tax and the District Tax to alleviate the fiscal inequality existing among the 25
districts.

Finally, understanding the fiscal inequality in a macro perspective based on the
analysis results and also recognizing the limitations and problems of the current
vertically-oriented intergovernmental transfers, this paper attempts to propose a
policy suggestion for introducing a horizontal intergovernmental fiscal transfer
system among the same level of local governments, especially, Districts in Seoul
Metropolitan Government. Although the topic of horizontal fiscal transfer system is
unpopular in the world-wide perspective on various reasons, it seems necessary
and about the right time to introduce the type of system in Korea.