Park Hong-keun, Minister of the Office for Government Policy Coordination, announced plans to invest additional tax revenue from the semiconductor boom into future growth areas such as youth, artificial intelligence (AI), local development, and talent cultivation, rather than using it for temporary expenditures.
On August 21, the Ministry held the first meeting of the Fiscal Management Strategy Council at the Government Seoul Complex, chaired by Minister Park, to discuss the implementation of the Future Response Fund and the reform of local education financial grants.
Minister Park stated, "We aim to establish the Future Response Fund by accumulating rapidly increasing tax revenues, using it as a strategic investment platform to support potential growth rate recovery and as a financial stabilization mechanism to mitigate revenue volatility."
He emphasized the need for bold and swift investments over the next two to three years to respond to the industrial transformation led by AI and the decline in potential growth rates. He also highlighted the necessity to change the existing fiscal management approach, which sees significant fluctuations in revenue and expenditure based on the semiconductor market.
"This additional tax revenue is a valuable resource for us at the forefront of the AI transformation, and we will ensure it is invested in essential areas," Park said. "The next two to three years will be a critical period for redesigning the national system in line with the full-scale spread of AI, providing an opportunity to reopen the growth potential of our economy."
The Future Response Fund will accumulate domestic tax revenues that exceed the average trend over the past decade. The fund will focus on four areas: youth, growth drivers, local development, and education/talent, and will also support three major mega-projects, including frontier-level AI, physical AI, and AI data centers.
If revenues decrease or if there is a shortfall during the year, the fund will use accumulated surplus funds to bolster fiscal capacity. If necessary, it will also be used for national debt repayment and will be invested in stocks and bonds through professional asset management firms to secure fund income.
The calculation method for local education financial grants will change from the current structure, which is automatically linked to 20.79% of domestic tax, to a new method that reflects the previous year's grants, the average real growth rate over the last three years, and changes in the school-age population.
The new grants will be calculated by applying the average real growth rate of the last three years to the previous year's grants and adding 35% of the average change in the school-age population over the last three years. To account for fixed costs such as personnel expenses, only a portion of the decrease in the school-age population will be applied.
Under the new formula, if the grants decrease compared to the previous year, the government will cover the shortfall. The difference between 20.79% of domestic tax revenue, excluding additional tax revenue, and the newly calculated grants will be allocated to the education and talent account within the Future Response Fund for use in early childhood and higher education, as well as talent attraction.
While the school-age population has decreased from 8.8 million in 2010 to 5.91 million in 2025, a 32.8% drop, grants have increased by 117.6% from 32.3 trillion won to 70.3 trillion won during the same period. The government aims to reduce fiscal volatility due to changes in tax revenue and the school-age population while addressing investment imbalances in the education sector.
The government plans to prepare legislation necessary for the establishment of the Future Response Fund and the reform of local education financial grants, with a submission to the National Assembly scheduled for early September alongside the 2027 budget proposal.
* This article has been translated by AI.
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