The upcoming National Assembly audit of the Ministry of Economy and Finance and the Ministry of Strategy and Finance will focus on how to utilize the significantly increased tax revenue.
According to the National Assembly and related ministries, the National Assembly's Planning and Finance Committee will conduct audits on the Ministry of Economy and Finance on October 6 and on the Ministry of Strategy and Finance on October 8. This year's audit is expected to see a heated debate between the ruling and opposition parties over the use of the increased tax revenue.
According to a recent tax revenue forecast by the Ministry of Economy and Finance, this year's national tax revenue is projected to reach 478.6 trillion won, which is 63.2 trillion won higher than the estimate of 415.4 trillion won made during the supplementary budget preparation in March. The improvement in semiconductor companies' performance and a favorable stock market are believed to have contributed to the increase in corporate and securities-related tax revenues.
The audit is likely to scrutinize the reasons behind the significant upward revision of the tax revenue forecast in a short period. Earlier this year, the financial authorities raised the revenue forecast by 25.2 trillion won when preparing the supplementary budget, but just a few months later, they adjusted it upward by another 63.2 trillion won. As a result, the methodology for estimating volatile tax categories, such as corporate tax, which fluctuates based on corporate performance and market conditions, is expected to be a topic of inquiry.
How to utilize the increased tax revenue will also be a major issue. The Ministry of Strategy and Finance has announced plans to allocate 162.3 trillion won in revenue for the Future Response Fund next year, investing in youth, growth drivers, local governments, and education. Of this amount, 45.4 trillion won will be directed toward related projects, while 12.5 trillion won will be used to reduce new government bond issuance. The remaining funds will be managed as surplus funds.
A key point of contention will be whether to transfer some of the expected excess tax revenue this year to the Future Response Fund. The recent forecast indicates that domestic tax revenue is expected to increase by 56.2 trillion won compared to the supplementary budget estimate, which could lead to a larger Future Response Fund if some of the excess tax revenue is allocated to it. Consequently, the audit is expected to examine the criteria for resource allocation, debating whether to reserve excess tax revenue for the Future Response Fund or to use it for reducing government bond issuance or debt repayment.
The management of the Future Response Fund and the level of fiscal control by the National Assembly will also be points of discussion. The government is pushing for a plan that would allow it to adjust fund projects within a certain range without National Assembly approval, depending on economic conditions or policy circumstances. This could lead to inquiries regarding the appropriateness of the self-imposed limits on changes. Given that large-scale resources are managed as a separate fund, the criteria for selecting projects, the expenditure structure, and the extent to which decisions made during the National Assembly's budget review process can be altered afterward will also be subjects of verification.
The impact on local finances is also expected to be a topic of concern during the audit. An increase in domestic tax revenue typically leads to a rise in local allocation taxes and local education financial grants. However, the scale of resources allocated to local governments may vary depending on how the criteria for calculating allocation taxes are adjusted during the formation of the Future Response Fund.
* This article has been translated by AI.
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