Jun Ji-hye, a reporter at the finance desk of The Korea Times, focuses primarily on economic policy and government agencies, mainly covering the Ministry of Finance and Economy, the Ministry of Budget and Planning, the National Tax Service and the Korea Customs Service. She previously covered financial authorities, including the Financial Services Commission and the Financial Supervisory Service, and earlier worked on the political, city and business desks, reporting on a wide range of issues.
Korea set to draw up 'super budget' of over $578 bil. on chip boom
Officials load semiconductors from Samsung Electronics and SK hynix onto an aircraft bound for Hong Kong at Korean Air's cargo terminal at Incheon International Airport, July 30. Joint Press Corps
By Jun Ji-hye
Next year’s budget is projected to top a record 800 trillion won ($578 billion), with national tax revenue expected to exceed 600 trillion won on the back of higher corporate tax receipts fueled by the semiconductor boom, government insiders said Tuesday.
They said the Ministry of Planning and Budget is in the final stages of preparing the budget proposal.
Last month, the ministry suggested a spending increase of 10 percent or more from this year’s 729.9 trillion won initial budget, signaling that next year’s budget could exceed 800 trillion won.
This would mark the first double-digit increase in total expenditure since 2009, when spending rose 10.9 percent amid the global financial crisis. Total spending increased 8.1 percent this year from the previous year’s initial budget.
The drivers behind the so-called “super budget” include improving revenue conditions, fueled by a semiconductor-driven surge in corporate tax payments and higher transaction tax revenues amid a bullish stock market.
Budget Minister Park Hong-geun had earlier projected tax revenues to top 500 trillion won, well above the 421.1 trillion won figure outlined in the 2025-2029 fiscal plan. Some government sources now anticipate that revenues could exceed 600 trillion won if market momentum holds.
In light of these conditions, the amount of additional tax revenue, which will serve as the primary source of funding for the Future Fund, is also expected to increase significantly.
The ministry unveiled plans last Friday to create the new fund, aiming to proactively channel capital into four core areas — youth support, long-term growth engines, regional economies and education.
Under a formula established by the ministry, any domestic tax revenue exceeding the baseline trend, calculated using the 10-year average annual growth rate of around 6 percent, will be classified as additional tax revenue and earmarked for the fund.
The baseline trend for domestic tax revenue next year is projected at about 370 trillion won. If total national tax revenue rises to 600 trillion won, domestic tax revenue would exceed 530 trillion won, based on its typical 88 to 89 percent share of total tax revenue. This scenario would generate an estimated 160 trillion won in additional tax revenue.
If higher corporate tax receipts push domestic tax revenue above 90 percent of total revenue, the amount of additional tax revenue could increase even further.
Specific figures for the additional revenue and detailed fund allocations will be finalized in the upcoming budget proposal.
President Lee Jae Myung called for a shift toward a more productive fiscal strategy, urging the government to use its increased fiscal capacity as an investment in future growth when drawing up next year’s budget.
“We should not focus too heavily on short-term fiscal indicators,” Lee said during a Cabinet meeting at Cheong Wa Dae in Seoul. “The government should seek to multiply the value of today’s spending over time. Policymakers should cut nonessential expenditures decisively while maintaining sound fiscal management.”