![Park Hong-keun, minister of the Ministry of Planning and Budget. [Yonhap]](https://wimg.heraldcorp.com/news/cms/2026/07/26/rcv.YNA.20260713.PYH2026071302080001300_P1.jpg)
[Herald Business = Ko Eun-gyeol] Park Hong-keun, minister of the Ministry of Planning and Budget, said the government is working on a plan to change the structure that allocates 20.79 percent of domestic tax revenue to the local education finance grant.
Speaking on KBS's Sunday Diagnosis program on Sunday, Park said the government is "working on a new proposal to break the structural link of 20.79 percent, given that the scale of domestic tax revenue has grown." He added that the government is in talks with the Ministry of Education and plans to submit the proposal as a bill for National Assembly review once the two sides reach an agreement.
He said the current domestic tax-linked formula was "a system introduced in the 1970s, when 1 million babies were born each year," suggesting it is no longer rational now that annual births have fallen to around 200,000.
However, Park said investment would not be cut. "We need to strengthen both primary and secondary education as well as kindergarten education," he said. "We will not reduce investment — we will continue investing in line with long-term trends."
Park said the government would not reduce the total grant amount, currently about 13 million won ($8,850) per student per year, and that savings would be redirected toward higher education, lifelong learning and early childhood education. "We need to reflect somehow the decline in the school-age population," he added.
Park reaffirmed the government's plan to restructure the basic pension — a monthly payment to the bottom 70 percent of earners aged 65 and older — into a system that gives more to lower-income recipients and less to higher-income ones.
On the basic pension, he said that because it covers up to the bottom 70 percent, "we have reached a situation where individuals with a monthly income of around 4.6 million to 4.7 million won are receiving the pension, and two-person households with incomes of around 7 million to 8 million won are also receiving it."
He said restructuring the system around the standard median income would allow the government to provide more support to those in genuine need, adding that discussions with the Ministry of Health and Welfare on such a redesign are "already in the final stages."
The standard median income is the midpoint of household incomes nationwide. This year, the figure stands at 2.56 million won for a single-person household, 4.2 million won for a two-person household and 5.36 million won for a three-person household.
On next year's budget, which Park had earlier signaled would exceed 800 trillion won, he said it would be prepared "in a direction that people can feel in their daily lives," with a focus on three mega-projects, reversing the decline in potential growth and building a social safety net for vulnerable groups.
Addressing concerns that expansionary fiscal policy could prolong high inflation, Park said the government must "pursue an active fiscal policy while ultimately approaching it in a way that minimizes the impact on prices."
He also said a future response fund — to be established using a sharp increase in tax revenue driven by the semiconductor boom — was conceived with the idea of channeling resources into "productive spending that opens up South Korea's future growth potential," and would be used for strategic investment or as a fiscal stabilization mechanism.
keg@heraldcorp.com
