Park Hong-keun Says Over 100 Trillion Won Future Response Fund Will Ease Tax Revenue Volatility

The government and the Democratic Party of Korea plan to launch a super-budget of more than 800 trillion won and create a Future Response Fund worth more than 100 trillion won to make large-scale investments in advanced industries such as artificial intelligence (AI) semiconductors. In budget talks on the 2027 budget bill held on the 25th, the two sides agreed on the broad goal of securing future growth engines. They also made clear their support for an expansionary fiscal policy. The main opposition People Power Party, however, voiced concern, saying the government should not spend excessively on the extra tax revenue generated by the semiconductor boom.

In the budget discussions for next year, the government and the ruling party decided to focus on investment and support for advanced industries.
Key measures include the creation of a special semiconductor account and capital injections into Korea Electric Power Corporation (KEPCO) and Korea Water Resources Corporation (K-water). As the government pushes for an 800 trillion won semiconductor investment in Honam, in addition to the existing 600 trillion won Yongin Semiconductor Cluster, it plans to back the effort with fiscal support. Budget spending is also expected for industrial complex rental land supply and infrastructure development.
The budget will also include support for developing Physical AI that reflects manufacturing expertise. The plan is to digitize manufacturing know-how and provide the robots and equipment needed to deliver AI solutions. In this regard, the Democratic Party has proposed bills to support the Ministry of Trade and Industry-led industry-academia-research M.AX Alliance for manufacturing AX (AI transformation) and to place young AI engineers in mid-sized and small companies.
Park Hong-keun, Minister of Planning and Budget, said, "We will focus support on production bases, core technologies, and talent development for the three mega-projects: semiconductors, Physical AI, and AI data centers (AIDC)." He added, "We will also invest generously to quickly build the infrastructure needed, including power, water, and industrial complexes."
Investment in the so-called 'NEXT 10 sectors,' which include other key industries such as electric vehicles, will also move forward. The package includes the largest-ever expansion of EV subsidies to drive the energy transition, more pilot zones and support for autonomous vehicles, support for a 2030 lunar landing R&D project, and expanded scale-up financing for venture firms.
This broad investment drive will be backed not only by the budget but also by the Future Response Fund, which will be built to a scale of more than 100 trillion won. The plan is to set aside part of the additional tax revenue generated by the semiconductor boom and use the fund to support core industries, including semiconductors. Under the National Finance Act, the government can change the fund management plan at its discretion within a 20 percent range, allowing for a swift and active fiscal response.
President Lee Jae Myung also stressed active fiscal policy at a State Council of South Korea meeting held at Cheong Wa Dae on the same day. He said, "Please complete the budget bill well, with a focus on solving key national tasks such as promoting ultra-gap growth, easing K-shaped polarization, balanced regional development, talent development, and building a future ladder for young people."
The People Power Party, meanwhile, did not oppose large-scale corporate support, but it raised concerns about excessive fiscal expansion. In particular, it pointed out that the Future Response Fund would be partly beyond National Assembly oversight and could hurt local finances.
Rep. Bae Jun-young, the opposition secretary on the National Assembly Finance, Economy and Planning Committee, said on the day, "Because semiconductors are making money, the Lee Jae Myung administration is trying to use that money to make a show of things without principles." He added, "Instead of distributing it to local governments and paying down debt first under the National Finance Act, they want to create an account called the Future Response Fund first."
Funds are usually created for a specific purpose, which limits how they can be spent. But the Future Response Fund has such broad goals — growth engines, youth, regions, and talent — that it is effectively close to the general account. That is why criticism has emerged not only from the People Power Party but also from the Rebuilding Korea Party, a minor party in the ruling bloc, that the government is creating a de facto overdraft account to avoid National Assembly budget review. The issue of strengthening parliamentary control is expected to become a key point in the National Assembly’s review of the Future Response Fund bill.
Bae also pointed to problems for local finances. He said, "They calculate the extra tax revenue by taking out the money they want to put into the fund first, based on the amount exceeding the average annual growth rate of domestic taxes over the past 10 years, and then apply the 19.24 percent local transfer tax rate to what remains." He added, "That means the local share will shrink, and while the central government says it will help, there is no timeline."
The government and the ruling party argue that bold fiscal investment will raise the potential growth rate, which in turn will expand tax revenue and help maintain fiscal soundness. Park said, "At a time when structural low growth is becoming entrenched, we must drive a trend-based rebound in the potential growth rate." He added, "To avoid using increased tax revenue on temporary spending, we will use the Future Response Fund as a strategic investment platform that supports a rebound in the potential growth rate and as a mechanism to smooth tax revenue volatility."
[email protected] Kim Yoon-ho Reporter