The South Korean government announced plans to establish a 'Future Response Fund' utilizing additional tax revenue generated from the semiconductor boom. The fund will focus on investing in four key areas: the future, youth, local development, and education, aiming to enhance the country's economic growth potential.
President Lee Jae-myung chaired a fiscal strategy meeting at the Blue House on July 13, discussing the government's vision for the second year of his administration, titled 'Irreplaceable Republic of Korea.' This meeting marked the first comprehensive discussion on fiscal management since the current government took office, with a particular focus on additional tax revenue rather than the usual budget discussions.
The government plans to create a special law to define 'additional tax revenue' instead of the existing concept of 'excess tax revenue,' directing these funds towards local balanced development and youth policies. A related organization within the Democratic Party will be established to manage the fund, with specific plans expected to be unveiled by the end of August, coinciding with the preparation of next year's budget.
President Lee emphasized, "This additional tax revenue is a valuable resource that will be used during a critical time for global AI dominance. To enhance economic growth potential and ensure that benefits are shared with all citizens, we need a strategic investment platform that guarantees bold and sustained investments."
He also mentioned the second principle, stating that the government's announced 'three mega projects' will create new opportunities for the economy. He pledged to mobilize all government resources to ensure investments in semiconductors, physical AI, and AI data centers align with corporate timelines.
"Stable supply of essential resources like electricity and water is fundamental," President Lee said, promising to improve living conditions through enhanced transportation, logistics, infrastructure, housing, education, healthcare, and culture, thereby establishing new growth hubs in South Korea.
The third principle he highlighted was 'growth for all.'
President Lee stated, "We will create a Republic of Korea where no one is left behind through inclusive growth. We will establish a support system that encompasses the entire life cycle for young people starting their careers, from job opportunities to housing and asset formation."
He added, "To ensure that the increasing number of non-standard workers in the AI era are fully protected, we will strengthen the social safety net to the level of a 'social safety mat.' The government will do its utmost to ensure that all citizens benefit from advancements in AI technology."
President Lee concluded, "The direction of the fiscal policies we discuss today will determine the future of South Korea for the next 20 to 30 years. I urge everyone to approach this discussion with the mindset that we are all the chief financial officers of the Republic of Korea."
Meanwhile, the Ministry of Economy and Finance projected that next year's national tax revenue would exceed the previously estimated 412 trillion won, reaching '500 trillion won plus alpha.'
Minister Park Hong-keun announced during the meeting that the total expenditure for next year would be set at '800 trillion won plus alpha,' marking an increase of over 10% from this year's budget, making it the largest in history.
* This article has been translated by AI.
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