South Korea plans future response fund from semiconductor tax revenue

The government will establish a "future response fund" using additional tax revenue expected from the semiconductor industry. Officials announced the plan during a fiscal strategy meeting. Tax revenue for 2027 is forecast to surpass 500 trillion won, exceeding the previous estimate of 412 trillion won. Officials said the fund could reach the 100 trillion won range if the higher projection holds.

Fund allocation and spending rules The fund will support policies for youth, regional development, and education programs. Officials stated that the money should be distributed sustainably and not spent on short-term or popular programs. The government also plans to restructure about 50 trillion won in expenditures to reduce redundancies and ineffective spending.

Megaprojects and infrastructure Officials said the government will use all available resources to carry out three megaproject initiatives announced earlier this month. One project includes a semiconductor hub in the southwestern region around Gwangju.

The government will provide land, electricity, and water supplies for the projects. Officials said the financial strategies for 2027 are critical to keeping participating companies on schedule. The administration has set a budget of 800 trillion won for 2027.

The Bank of Korea forecast that the semiconductor supercycle will extend into the first half of next year.