Presidential Chief of Staff Kang Hoon-sik announced on the 5th at a high-level party-government meeting that the Lee Jae-myung administration will establish a Future Response Fund using additional tax revenue from the semiconductor industry boom. The fund aims to invest in future growth engines including three mega-projects, address K-shaped polarization, and support youth housing, startups, and employment. The government distinguished 'additional tax revenue' from 'excess tax revenue' to avoid legal spending constraints under the National Finance Act, which mandates that excess tax revenue be prioritized for local government grants, public fund repayment, and national bond repayment.
Government Announces Future Response Fund for Growth and Polarization
Kang Hoon-sik stated at the meeting: "The Lee Jae-myung administration will pursue the establishment of a Future Response Fund to utilize additional tax revenue as investment resources for future generations." The announcement formalized the fund establishment that the Ministry of Planning and Budget had been reviewing. The government presented a plan to create the fund using additional tax revenue generated from the semiconductor boom, directing resources toward three areas: future growth engine creation including support for three mega-projects, response to K-shaped polarization, and support for youth housing, startups, and employment. Final details will be confirmed through future party-government-Blue House discussions.
![Presidential Chief of Staff Kang Hoon-sik speaking at high-level party-government meeting]()
Presidential Chief of Staff Kang Hoon-sik speaking at the high-level party-government meeting at the Prime Minister's residence in Samcheong-dong, Jongno-gu, Seoul on the 5th. Photo: Yonhap News
Ministry of Planning and Budget to Draft Fund Legislation
The Ministry of Planning and Budget will commence follow-up work to establish the fund. The ministry will prepare a draft law tentatively titled "Act on the Establishment and Operation of the Future Response Fund" and pursue amendments to the National Finance Act to operate it as a statutory fund under that law. The legislation will include provisions on the fund's financing methods, operational principles, and support targets.
The government's use of the term 'additional tax revenue' rather than 'excess tax revenue' addresses legal constraints. Excess tax revenue refers to tax income exceeding the government's original forecast. In April, the government raised its national tax revenue forecast for the year from 390.2 trillion won to 415.4 trillion won through a supplementary budget, estimating excess tax revenue at 25.2 trillion won. Under the National Finance Act, excess tax revenue must be used first for settlement of local allocation tax and local education finance grants, repayment of public funds, and repayment of government bonds.
A government official stated: "If the fund's resources are defined as excess tax revenue, there will be various constraints on financing. We also considered that if the government accurately estimates tax revenue, excess tax revenue may not occur even when tax revenue increases."
Additional Tax Revenue Definition Remains Unclear
The fiscal authorities have not clarified how they will define additional tax revenue. Unlike excess tax revenue, which has a clear meaning, additional tax revenue is a relatively ambiguous concept. Inside and outside the government, observers speculate that the standard may be based on year-over-year tax revenue increases or increases relative to long-term trends, given expectations that corporate taxes from semiconductor companies like Samsung Electronics and SK Hynix will increase significantly over the next several years due to the semiconductor boom.
A Ministry of Planning and Budget official explained: "Excess tax revenue means the surplus relative to a single fiscal year's revenue budget, but additional tax revenue can be defined as the surplus relative to long-term trends. We used the term additional tax revenue because we expect tax revenue to increase for several years due to the semiconductor boom and other factors."
FAQ
What did Presidential Chief of Staff Kang Hoon-sik announce on the 5th?
Kang Hoon-sik announced at a high-level party-government meeting that the Lee Jae-myung administration will establish a Future Response Fund using additional tax revenue from the semiconductor boom to invest in future growth engines, address K-shaped polarization, and support youth housing, startups, and employment.
Why did the government use 'additional tax revenue' instead of 'excess tax revenue'?
The government used 'additional tax revenue' to avoid legal spending constraints under the National Finance Act, which requires excess tax revenue to be used first for local government grants, public fund repayment, and national bond repayment. A government official stated that defining the fund's resources as excess tax revenue would create various financing constraints.
How much did the government revise its national tax revenue forecast in April?
In April, the government raised its national tax revenue forecast from 390.2 trillion won to 415.4 trillion won through a supplementary budget, estimating excess tax revenue at 25.2 trillion won.
