The Incheon Metropolitan Government is preparing its own “Incheon-style livelihood support measures” in response to the high oil prices and high exchange rates caused by the prolonged Middle East war. The city aims to address the metropolitan area discrimination in the central government’s supplementary budget using its own financial resources.
On April 11, the central government finalized a 26.2 trillion won “supplementary budget for civilian damage support due to the Middle East war.” However, without prior consultation with local governments, the central government required local governments to bear 20% of the high oil price relief fund.
In response, Incheon Mayor Yoo Jeong-bok held a press briefing at City Hall on the 14th, expressing agreement with the intent of the government’s supplementary budget while directly criticizing the government’s position that increased local allocation tax should be used for government project contributions. He strongly pushed back against the central government’s unilateral designation of local allocation tax usage, calling it “an infringement on fiscal sovereignty.”
“The reason we so tenaciously paid off our debts and built sound finances is clear,” he said. “It was so that we could be a solid shield for our citizens when an economic crisis like this arrives.”
Behind this confidence is fiscal soundness achieved by reducing the debt ratio from 39.9% in 2015 to 14.9% currently through intensive fiscal management during his 6th and 7th terms. Incheon City’s position is that it will protect its citizens even if it means issuing municipal bonds, using the capacity secured by paying off 3.7 trillion won in debt.
Accordingly, the city will invest the full increase in local allocation tax—an independent revenue source—into the “Incheon-style livelihood support supplementary budget,” while raising the 20% contribution demanded by the government through its own municipal bond issuance. The total scale is 165.7 billion won.
