일본 지방소비세 고찰 및 한국에의 시사

To compensate the fall of revenue from the acquisition tax, South Korea decided to raise the local consumption tax rate from 5% to 11% in December 2013. In March 11, 2014, Korean cabinet also passed the guideline of ‘Local Tax Act’ that included the allocation formula of the tax revenue from the raise of the 6 percentage points, which implies that the local consumption tax can be a main tax at the upper-level local governments in Korea. The issue on how to allocate the revenue from the hike of local consumption tax to each upper-level local government or to local education finance, however, largely appears without discussing what criteria should be adjusted to local consumption tax. Even though South Korea introduced the VAT in 1977 prior to Japan in 1989, Japan carried out the tax reform, prior to Korea, that it introduced the local consumption tax utilizing general consumption tax. Japanese governments had discussed the rationale for the operation of local consumption tax based on tax criteria such as benefit principle. This paper aims to investigate the local consumption tax in Japan and to provide some implications to the establishment of the local consumption tax in Korea. The VAT-type of local consumption tax may not be suitable for achieving the benefit principle because the creation of the value-added in each region may not correspond to the benefit received from local public services. Korea should inform the residents of the limitations at the liquidation formula of the local consumption tax as well as of how to allocate the increase of revenue to local education finance.