Rep. Ahn Do-geol of the Democratic Party of Korea [provided by the lawmaker's office]
Rep. Ahn Do-geol of the Democratic Party of Korea [provided by the lawmaker's office]

Rep. Ahn Do-geol of the Democratic Party of Korea (Gwangju Dongnam-eul, floor deputy leader and standing vice chairman of the policy committee) said Thursday he had introduced a bill to amend the National Fiscal Act on Wednesday, aimed at building a fiscal system to systematically address large-scale tax surpluses and shortfalls.

According to Ahn, tax revenue volatility has been rising sharply, driven by the AI revolution and a semiconductor supercycle. This year, a surplus of at least 45 trillion to 55 trillion won ($36.9 billion) is expected — including 25.2 trillion won already reflected in the supplementary budget passed in April — on the back of a semiconductor boom and buoyant capital markets. For next year, some analysts have raised the possibility of additional tax revenue reaching up to 100 trillion won above the original medium-term fiscal plan.

The current National Fiscal Act, however, contains no clear provision requiring the government to revise revenue estimates or submit them to the National Assembly for review when large-scale tax swings occur mid-fiscal year.

As a result, when a shortfall arises, the government has been able to unilaterally cut or leave unspent programs the Assembly had already reviewed and approved. Conversely, when a surplus occurs, most of the excess has been treated as a year-end surplus and directed primarily toward local government transfers and government bond repayment, leaving little room for forward-looking strategic investment or economic stabilization.

The bill would allow the government to draft and submit a supplementary budget to the National Assembly whenever tax revenue is projected to rise or fall by 5 percent or more from the original estimate during a fiscal year. The measure is designed to align both revenue and expenditure with actual conditions while strengthening the Assembly's budget review and approval authority and improving the predictability of fiscal management.

The bill also establishes a new fiscal stabilizer called the "Future Response Fund" to manage tax revenue volatility. Ahn described it as a "fiscal dam" — modeled on a reservoir that stores water during rainy seasons for use during droughts — designed to set aside surplus revenue in good years for strategic use and draw on those reserves when shortfalls occur.

The Future Response Fund would be restricted to spending on building future growth engines and infrastructure, narrowing asset and income gaps and promoting balanced regional development, covering revenue shortfalls and repaying government bonds, and investing in youth and cultivating talent in future industries — all areas aimed at strengthening the country's long-term competitiveness and fiscal stability.

"With tax surpluses and shortfalls recurring, the current approach to fiscal management makes it difficult to respond effectively to sharp revenue swings," Ahn said. "We need to allow supplementary budgets when large-scale revenue changes occur, and build a Korean-style fiscal safety net that stores resources during boom years and draws on them during lean ones through the Future Response Fund. Through this amendment to the National Fiscal Act, I intend to establish a new fiscal framework that is not shaken by revenue volatility, and to create a new fiscal paradigm that converts tax surpluses into South Korea's future competitiveness."


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