The government is reviewing the current system of distributing 20.79% of domestic tax revenue for local education funding. This move aims to change the structure that allows education funding to increase alongside rising tax revenue, despite a declining school-age population. A reform proposal could be announced as early as next week.
According to Yonhap News, the Ministry of Economy and Finance and the Ministry of Education are finalizing adjustments to the local education funding reform plan, with the key issue being whether to abolish the domestic tax linkage system.
The local education funding is allocated by the central government to local education offices for use in primary, middle, and high school education. Currently, 20.79% of domestic tax revenue is automatically distributed as funding.
The Budget Office has reportedly suggested abolishing this linkage system and instead incorporating factors such as economic growth and the declining school-age population into the funding calculation. They believe it is necessary to improve the current structure, which automatically increases funding despite a decrease in student numbers due to rising tax revenue.
While the Ministry of Education agrees on the need for reforming education finance, it opposes the abolition of the domestic tax linkage system. They proposed maintaining the current system but redirecting a portion of any unexpected tax revenue increase to a 'future response fund' as an alternative.
Both ministries are also discussing the establishment of a 'talent and education account' within the future response fund to support early childhood education and higher and lifelong education. This could connect the funding reform to a broader restructuring of education finance distribution.
However, significant differences remain between the two ministries regarding the fate of the domestic tax linkage system, which could delay consensus. If disagreements are not resolved, there are concerns that a unified government proposal may not be prepared by the end of this month, coinciding with the deadline for next year's government budget.
A Budget Office official stated, "The timing of the announcement is uncertain as discussions with the Ministry of Education have not been finalized."
* This article has been translated by AI.
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