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Research Report

A Study on Modelling of Legal Control System regarding Fiscal Activities
  • Issue Date 2021-09-30
  • Page 115
  • Price 7,000
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Ⅰ. Backgrounds and Purposes
▶ Recent Covid 19 Pandemic has raised awareness of the active role of public finance
○ Public awareness of the importance of public finance has increased dramatically in the process of overcoming the economic crisis caused by the COVID-19 pandemic through an active role of public finance 
▶ With this background, securing the legality of fiscal expenditure has become more important
○ In proportion to the importance of public finance, securing the legality of fiscal expenditure  would be the way to, both prevent fiscal waste and get better outcome
▶ As a means of controlling fiscal expenditure, it is needed to review the structure and role of residents’lawsuit system
○ As 15 years have passed since the introduction of residents’ lawsuit, it is necessary to review the results.
  - Residents’ suit was originally introduced from the perspective of fiscal democracy
  - With its low utilization rates, it is necessary to examine the cause of, and suggest measures to improve it
○ It would be helpful to examine residents’ suit from the perspective of fiscal rule of law.
  - This is because the residents’ lawsuit consists of judicial means of litigation
  - In the characteristic of objective litigation, improvement measures can be found by comparing them with other subjective litigation systems(like administrative litigation and constitutional litigation)
Ⅱ. Major Content 
▶ Reviewing from the perspective of fiscal democracy and fiscal rule of law
○ Review from the perspective of fiscal democracy
  - Fiscal democracy is divided into fiscal representative-democracy and fiscal direct-democracy.
  - The term “fiscal democracy” mainly refers to “fiscal parliamentarianism”
  - The relationship between fiscal representative-democracy and fiscal direct-democracy is in a structure in which fiscal direct-democracy must appear if parliamentary fails to fulfill its responsibility for controlling fiscal expenditure in sufficient quantity
○ Review from the perspective of fiscal rule of law
  - Although residents’ suit is a means of direct democracy, residents themselves have no power, so they inevitably seek to acquire coercion through judicial means
  - For that reason, it can be reviewed from the perspective of fiscal rule of law
  - Compared to administrative litigation or constitutional litigation, the limitation of public interest litigation that lacks private interests seems to provide the greatest cause for the poor using rates of residents’ suit
  - Accordingly, it is necessary to supplement the limitations of public interest litigation in terms of increasing private incentives and reducing cost burdens. 
▶ Case law analysis of resident litigation
○ In total, 45 residents' lawsuits have been filed over 15 years
○ Among them, five legally important precedents were analyzed
  - Regarding the scope of residents’ suit, the Supreme Court is evaluated to be making efforts to expand the scope of residents’ suit by presenting positive principle that ① not only direct fiscal expenditure and its causative acts ② but also, only exceptionally though, its preceding acts are subject to residents’ litigation
  - Plus, in the relationship between an audit claim and a lawsuit, it also suggests a legal principle that expands the scope of a resident's lawsuit, saying that a lawsuit can be filed if it is intrinsically related to the object requested for audit.
○ As a result of the analysis of precedents, it is judged that the narrow attitude of precedents or interpretations of the law is not the cause of poor utilization rates of residents' lawsuits.
○ Therefore, it is necessary to supplement the structural limitations as public interest-and-objective litigation in resident’s suit
▶ Suggestions for development of the residents’lawsuit system
○ some suggestions for Improvement in residents’ suit system
  - In order to strengthen the private incentives, a certain amount of compensation is needed
  - In order to strengthen public interest, there is a need for restricting the right to run for public office by the heads of local governments, in proportion to illegality, for a few years
  - In order to reduce cost burdens, there is a need for reducing litigation costs even in the event of a loss
○ Reviewing the necessity of introducing a citizens’ lawsuit
  - The introduction of citizens’ suit can be recognized as inevitable from the perspective of relational model, reviewed above, of between fiscal parliamentarism and fiscal direct-democracy, so the “Citizens’ Lawsuit Bill” can be evaluated positively.
  - However, there are still some concerns about the continuity of the national administration, so suggestions, here, such ideas as ① step-by-step introduction (=introduction of only claims for damages first, before other lawsuit types) and ②  introduction of a 1.5-fold claim system when claiming damages, may be useful
Ⅲ. Expected Effects
○ As a theoretical achievement, a comprehensive understanding of residents’ suit and citizens’ suit  can be tried by establishing a model of legal control system regarding fiscal activities through theoretical and structural analysis of residents’ lawsuit in history and precedents 
○ As a practical achievement related to finance and basic rights, it can contribute to strengthening fiscal control, residents’ autonomy rights, and people’s sovereignty rights through suggesting concrete improvement measures surrounding residents' lawsuit system.