Rural Special Tax Revenue Expected to Exceed 10 Trillion Won Amid Stock Market Boom

As the stock market experiences a boom this year, revenue from the Rural Special Tax (RST) is projected to surpass 10 trillion won for the first time. However, there are growing calls to reassess how these funds are utilized, as the current allocation methods do not adequately address the rapidly changing agricultural environment.

According to relevant authorities, RST revenue collected by April reached 57 trillion won, an increase of 34 trillion won compared to the previous year. The revenue collection rate stands at 42.1%, exceeding last year's rate of 24.8% and the five-year average of 30.1%.

If the current trend continues, the government is likely to exceed the 13.6 trillion won target set during the supplementary budget process, marking a record surplus. This is due to the structure of the RST, which is linked to trading volumes in the stock market. Since 0.15% of the KOSPI trading volume is collected as RST, continued popularity of the KOSPI is expected to drive further increases in RST revenue.

The RST was introduced in 1994 as a temporary tax to address the impacts of agricultural liberalization following the Uruguay Round negotiations. It has since been extended three times and effectively established as a permanent tax. The original purpose was to compensate for losses due to market opening and to facilitate short-term agricultural structural improvements.

The challenge is that the structure of domestic agriculture and policy issues have changed significantly since then, yet the spending of RST has not adapted accordingly. The agricultural sector now faces critical challenges directly linked to national survival, including the deepening rural extinction crisis, food security, climate change adaptation, and the transition to smart agriculture, but there has been insufficient investment to address these issues.

Critics argue that the RST funds are dispersed across hundreds of projects, failing to achieve the intended goals of structural reform and competitiveness enhancement. In fact, last year, 5.706 trillion won of RST funds were allocated to rural welfare and regional revitalization projects, which accounted for the largest share of expenditures. This has led to assessments that the core functions of structural reform and overall competitiveness enhancement, which were the original intentions behind the RST, have been significantly weakened.

As a result, voices within and outside the agricultural sector are calling for a redefinition of the RST's role. There are suggestions to avoid the dispersion of funds across numerous projects and instead focus on agricultural structural reform. Emphasis should be placed on securing future growth drivers and strategic national projects, such as fostering young farmers, building advanced smart agriculture infrastructure, and improving food self-sufficiency.

Hong Gi-yong, a professor at Incheon National University, stated, "Given the current stock market boom, additional RST revenue is likely, but the legal stipulations on its use are excessively restrictive. We need to make RST expenditures more flexible and focus on select projects to facilitate agricultural structural reform."