Ryu Deok-hyun, the Senior Secretary for Economic Affairs at the Blue House, projected on September 2 that corporate tax revenue for next year will exceed 200 trillion won, driven by a boom in the artificial intelligence (AI) industry and the semiconductor sector. He also estimated that total national tax revenue would surpass 580 trillion won.
During an appearance on CBS Radio's 'Park Seong-tae's News Show,' Ryu stated, "We expect corporate tax revenue from the semiconductor boom to be over 200 trillion won next year," adding, "Total national tax revenue is expected to exceed 580 trillion won."
Ryu identified the global growth of the AI industry as a key factor contributing to the increase in corporate tax revenue for domestic semiconductor companies. He noted that improvements in the domestic economic conditions are also enhancing overall tax revenue from income tax, securities transaction tax, and consumption-related taxes.
Based on these projections, the government has prepared a budget plan for next year amounting to 820.9 trillion won, an increase of 93 trillion won from this year. Ryu emphasized that this budget is not merely an expansion of fiscal size but is focused on enhancing growth potential and improving citizens' lives.
He pointed out that South Korea's potential growth rate has been declining by about one percentage point every five years, currently hovering around 1%, and could fall to zero. Ryu noted that the stagnation of the South Korean economy over the past three years, in contrast to the global economy, is partly due to a lack of proactive government involvement.
While the semiconductor boom has expanded the overall economy, Ryu acknowledged that the improvement in citizens' quality of life has not been sufficient. He stated that the government needs to create a virtuous cycle of economic growth and fiscal stability while supporting the lower tiers affected by K-shaped polarization.
The main directions of next year's budget include enhancing citizens' lives, providing support throughout the life cycle, ensuring equal opportunities, and fostering future growth industries. Plans are in place to expand support for education, entrepreneurship, and employment, as well as to invest in research and development and industrialization of three major mega projects and seven key seed industries.
Regarding support for public universities, Ryu announced that starting next year, the government will subsidize tuition for new students at 30 public universities. He explained that currently, about 70% of enrolled students receive national scholarship benefits.
The government plans to establish a future response fund amounting to 162.3 trillion won, rather than spending the entire increase in tax revenue at once. Of this, approximately 45 trillion won will be included in next year's budget of 820.9 trillion won, while over 100 trillion won will be reserved for future fiscal needs and fluctuations in the semiconductor market.
In response to concerns that the future response fund would not be subject to parliamentary oversight, Ryu refuted this claim, stating, "We have established a mechanism to report to the National Assembly as soon as there is a demand."
Ryu also addressed criticisms regarding the mismatch between the Bank of Korea's interest rate hikes and the government's expansionary fiscal policy. He asserted, "Selective support for small businesses and vulnerable groups struggling due to interest rate increases is a role that fiscal policy must fulfill," emphasizing that next year's managed fiscal deficit will be close to balance at about 0.1% of GDP.
* This article has been translated by AI.
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