Tax revenue seen rising despite expansionary spending, improving fiscal health

Han Byung-do, floor leader of the Democratic Party of Korea, speaks at a floor strategy meeting at the National Assembly on Tuesday. [Yonhap]
Han Byung-do, floor leader of the Democratic Party of Korea, speaks at a floor strategy meeting at the National Assembly on Tuesday. [Yonhap]

The Democratic Party of Korea has praised the government's proposed budget for next year — totaling about 820.9 trillion won ($598 billion) — as "a bold investment for South Korea's great transformation and leap forward, and for the hopes of the people," calling it the largest fiscal investment ever made for the country's growth and the people's future.

The Democratic Party said in a press release Tuesday that the budget proposal "goes beyond sustaining the economic recovery momentum and focuses on driving potential growth to strengthen South Korea's economic fundamentals, while spreading the fruits of growth to address structural polarization." The government-drafted budget is set to clear a Cabinet meeting Thursday before being submitted to the National Assembly that day.

The party said 84 trillion won would be invested in three major mega-projects, all-out AI support and the expansion of future growth engines — a 35 percent increase from this year's 62 trillion won allocation. Investment targeting structural polarization — including comprehensive support for youth at each stage of development, locally driven growth, small business owners, farmers and fishermen, and livelihood stabilization — would rise 41 percent, from 114 trillion won this year to 160 trillion won.

The party added that these increases "far exceed the 12.8 percent growth rate in total expenditure," reaffirming that the budget represents the largest-ever fiscal investment for South Korea's growth and the people's future.

On national tax revenue, the party said the budget "demonstrates a virtuous fiscal cycle in which revenue increases and fiscal soundness improves through economic growth, even with expansionary spending." It projected next year's national tax revenue at 584.4 trillion won — an increase of 194.2 trillion won from this year's original budget of 390.2 trillion won — driven mainly by corporate and income taxes on the back of a strong semiconductor sector.

The Democratic Party also pledged to "supplement the budget during the National Assembly review process for the 2027 budget so that fiscal policy can underpin South Korea's future and the hopes of its people."


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