South Korea’s Ministry of Economy and Finance will set up a Future Response
Fund, financed primarily by excess tax receipts from sectors such as
semiconductors, to convert windfall revenue into strategic investment aimed at
lifting potential growth. Officials have not fixed a size; South Korean media
and government estimates put a conservative floor of about W120 trillion
(roughly $86bn). The government defines eligible revenue as the portion of
domestic tax receipts that exceed a long-term trend estimate (not short-term
cyclical gains). Planned inclusions also cover surplus tax, balances of the
national surplus fund and its investment returns. Preliminary accounting
suggests roughly W98 trillion could come from the gap between the 2027 domestic
tax estimate (above W450 trillion) and the long-term trend estimate (about W352
trillion), plus roughly W20 trillion from local education-fund reform, totaling
more than W118 trillion. Funds will target youth employment/living support,
national growth engines (including frontier AI, physical AI, AIDC, SMR and
aerospace), regional development, and education/talent. The fund will be managed
by the Ministry of Economy and Finance with five accounts (overall, youth,
growth engines, regions, education/talent). Project selection will be overseen
by a public–private review committee modeled on lottery-fund governance, and the
fund’s operating plan must be submitted annually to the National Assembly.
Analysts note the design appears intended to route semiconductor-driven tax
gains into discretionary strategic investment, potentially sidestepping the
spending order in the National Finance Act (local education allocations,
public-debt repayment). Draft legislation, including the fund and local
education-fund reforms, will be publicly notified 24–28 this month, reviewed at
a cabinet meeting on the 1st of next month and submitted to the National
Assembly on the 3rd alongside the 2027 budget.
