President pledges to put tax windfall toward AI, chips with 'investments for future'
At the national fiscal strategy meeting, the government announced plans to pour record revenue into growth drivers, the youth and regional development.
President Lee Jae Myung speaks at the national fiscal strategy meeting at the Blue House in central Seoul, on July 13.NEWS1
President Lee Jae Myung announced on Monday that his administration will use an expected surge in tax revenue to “fund strategic investments for the future.”
"An unprecedented increase in tax revenue is expected on the back of the semiconductor boom sparked by the AI revolution," Lee said at the national fiscal strategy meeting held at the Blue House. "We will establish a response fund to concentrate investment in four areas that will determine the country's future — the future economy, young people, regional development and education.”
He also pledged a “full mobilization of the government’s capabilities” for the administration's three “megaprojects” — semiconductors, AI data centers and physical AI, especially the development of semiconductor industrial complexes in the Seoul metropolitan area and the southwestern Honam region, which encompasses Gwangju and the Jeolla provinces.
"Even workers in nontraditional forms of employment, whose numbers are inevitably expected to grow in the AI era, must be protected without gaps," Lee said. "We will strengthen the social safety net into a true 'safety mat' and provide ongoing government support so everyone can fully benefit from advances in AI technology."
The government plans to draw up a record budget exceeding 800 trillion won ($536 billion) for next year, over 10 percent higher than this year's original budget, to support the strategy.
"National tax revenue in 2027 is expected to surpass the original forecast of 412 trillion won and exceed 500 trillion won, marking the largest tax haul on record," Park Hong-keun, the minister of planning and budget, said at the meeting. "If you ask whether the country's fiscal health is sound, the answer is clearly yes. Both the fiscal balance and national debt will improve markedly beginning next year."
Minister of Planning and Budget Park Hong-keun, right, speaks during the national fiscal strategy meeting at the Blue House, central Seoul, on July 13.NEWS1
Government ministries also unveiled plans to accelerate the three megaprojects.
Greater fiscal support will be needed to back private sector investment in semiconductors, said Kim Jung-kwan, minister of trade, industry and resources.
"Major countries are pouring astronomical amounts of money into semiconductors because they see the competition as a battle for national survival," Kim said. "China has committed 152 trillion won, Japan 95 trillion won and the United States 80 trillion won. Korea also needs fiscal support at least on par with its competitors."
The minister emphasized that the government will enact a new law within this year to provide the highest level of regulatory exemptions for companies investing in semiconductors.
"We will decide whether to build new nuclear power plants and introduce small modular reactors after consulting experts and gathering public opinion to respond to rapidly growing electricity demand and stabilize baseload power,” Kim Sung-whan, minister of climate, energy and environment, said. “The decision will be reflected in the 12th Basic Plan for Electricity Supply and Demand.”
Industry Minister Kim Jung-kwan, left, speaks to chief of staff for policy Kim Yong-beom during the national fiscal strategy meeting at the Blue House in central Seoul on July 13.YONHAP
Industrial complexes requested by local governments will be designated within one month, exemptions from preliminary feasibility studies will be pursued and permit procedures will be fast-tracked, said Kim Yun-duk, the minister of land, infrastructure and transport.
"We will dramatically shorten a process that typically takes more than 10 years to match business timelines," the land minister said. "We will complete land compensation for the Yongin semiconductor cluster within this year and begin construction.”
President Lee also discussed the potential need to adjust electricity rates after hearing reports that Korea’s industrial electricity rates are more expensive than residential electricity rates, unlike other countries, remarking, "The current system, where residential electricity rates are the same day and night, doesn't make sense."
Government officials attend the national fiscal strategy meeting at the Blue House in central Seoul on July 13.NEWS1
Climate Minister Kim called for time-of-use pricing, a system already applied to industrial rates under which prices vary by time of day, to be expanded to residential consumption.
Lee said the change could enhance efficiency.
"Applying time-of-use electricity pricing to households could also address the inefficiency of heat pumps,” the president said after hearing that installation of heat pumps, which eliminate the use of fossil fuels, has lagged because city gas is cheaper than electricity.
Wrapping up the meeting, he urged bipartisan cooperation.
"Korea stands at a turning point. We must decide whether to make a leap the country has never seen before or lose this opportunity through division and fall back into decline," Lee said. "The issue is political leadership."
The president also urged politicians to work together rather than engage in partisan conflict.
"A society that strengthens its own capabilities will prosper," Lee said. "But a society that tears others down, waits for others to fail and even obstructs progress will ultimately determine its own rise or fall."
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
