Seoul, Aug 21 — South Korea will launch the "Future Fund" to promote long-term economic growth, using what the government calls "windfall revenue" from increased tax collection driven by the recent artificial intelligence (AI) boom, the budget ministry said on Friday.
The Ministry of Planning and Budget unveiled the plan in partnership with relevant government agencies, saying the AI industry has sparked a major transition across various areas, from the economy to social systems, beyond just a technological revolution, reports Yonhap news agency.
"Amid the global chip boom, domestic tax revenue is expected to rise sharply, driven by an increase in corporate tax revenue," the budget ministry said.
"We need to use the fiscal capacity secured under the current circumstances as valuable ammunition to take the lead in the global competition for technological supremacy," it added.
"Rather than spending these precious resources on one-off expenditures or using them to maintain fiscal soundness in a passive manner, we need to use them proactively to lay the groundwork for future growth," Budget Minister Park Hong-geun also said during a press conference.
"We need to change the way we manage public finances in line with the characteristics of our economy and the evolving fiscal environment," Park added.
"The government will set aside the sharply increasing tax revenue to establish the Future Fund and use it as a strategic investment platform to raise the country's potential growth rate and mitigate the effects of tax revenue volatility," he said.
The budget ministry introduced the concept of "windfall revenue," referring to tax revenue exceeding its long-term trend due to structural economic changes or significant economic fluctuations, such as an industrial supercycle.
The government said the concept differs from surplus tax revenue, which refers to tax receipts exceeding official forecasts due to unexpected short-term economic fluctuations or forecasting errors.
The windfall revenue will be used to finance the Future Fund, while surplus revenue will be used to fund supplementary budgets, repay government debt or make contributions to the fund.
The budget ministry said the fund will serve as a strategic investment platform aimed at boosting the country's potential economic growth.
The fund will also serve as a platform for fiscal stability, contributing to greater stability and efficiency in the country's budget management, the ministry said.