The Future Response Fund may exceed 200 trillion won, raising concerns about financial transparency and its impact on local finances. This potential increase is attributed to higher-than-expected surplus tax revenue from a robust semiconductor market. As legislation to establish the fund has yet to pass the National Assembly, debates continue over the fund's size, management, and performance evaluation system.
According to relevant government departments, the government has budgeted 162.3 trillion won for the Future Response Fund for the upcoming year. If some of the surplus tax revenue is allocated, the fund could surpass 200 trillion won.
The Ministry of Economy and Finance reported on September 30 that this year's national tax revenue is projected to reach 478.6 trillion won, exceeding the revised budget estimate by 63.2 trillion won. If 56.2 trillion won of this surplus tax revenue is added to the Future Response Fund, the total could exceed 200 trillion won. However, since the related legislation has not yet passed, the final size of the fund remains uncertain.
A key issue is the fund's oversight by the National Assembly. During a National Assembly audit on October 8, concerns were raised that the fund could operate as a 'permanent supplementary budget,' bypassing the Assembly's budget review and approval process. This could weaken the Assembly's control over budgetary matters if the government uses surplus tax revenue to accumulate large funds and initiate projects.
Minister of Economy and Finance Park Hong-keun stated, "We will operate within the legal framework." However, if a structure is established that allows for increased fund resources whenever surplus tax revenue arises, questions remain about how to ensure predictability in financial management and the Assembly's oversight.
The National Assembly's Legislative Research Service highlighted key issues regarding the Future Response Fund, including the lack of transparency in utilizing surplus tax revenue, the expansion of exceptions to the total budget principle, and the potential for increased government discretion due to changes in fund management plans. As the use of funds expands, it is essential to clarify the relationship with existing budget procedures and establish controls over resource allocation and project changes.
The impact on local finances is also a variable. During the audit, it was noted that local grants could decrease by approximately 31 trillion won if the existing formula is applied. This suggests that calculating local grants based on domestic tax revenue, excluding the Future Response Fund's reserves, could reduce the resources available to local governments.
Minister Park acknowledged that calculating grants based on domestic tax revenue, excluding the fund's reserves, would indeed result in a lower distribution amount compared to the previous method. However, he noted that next year's local grants are expected to increase by 11.3% to 77.2 trillion won compared to this year, and any shortfall could be addressed during the National Assembly's review process. The overall impact of the reduction compared to the previous formula on local finances will need to be assessed.
There is also a need for mechanisms to verify the actual investment outcomes of the fund. During the audit, it was pointed out that while about 13 trillion won is allocated for the youth account of the Future Response Fund next year, two out of ten new projects lack performance indicators. Given the significant funding involved, it is crucial to establish objective criteria for evaluating project goals and outcomes.
As such, even if surplus tax revenue is utilized as a long-term investment resource, it is essential to ensure both the National Assembly's financial oversight and the verification of project outcomes. The National Assembly's Legislative Research Service emphasized that considering the scale and nature of the Future Response Fund, the use of surplus tax revenue or the compensation for tax revenue shortfalls could significantly impact national finances, suggesting the need for prior review and approval by the National Assembly.
* This article has been translated by AI.
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