Tuition waived for freshmen at 30 national universities; seven 'seed industries' to be nurtured

Surplus tax revenue to fund 162.3 trillion won future-response reserve; targeted support for vulnerable groups amid rate hike

Ryu Deok-hyeon, fiscal planning adviser at Cheong Wa Dae. [Newsis]
Ryu Deok-hyeon, fiscal planning adviser at Cheong Wa Dae. [Newsis]

Cheong Wa Dae on Wednesday defended the government's proposed 821 trillion won ($598 billion) budget for next year, calling it "fiscal policy that expands the lives of the people" and arguing that active government spending is needed to reverse a slowdown in potential growth and overcome widening K-shaped inequality. Officials also projected that corporate tax revenue alone would exceed 200 trillion won next year, driven by a semiconductor boom fueled by the global AI frenzy.

Ryu Deok-hyeon, fiscal planning adviser at Cheong Wa Dae, said on CBS Radio's "Park Sung-tae's News Show" that day that "we need to broaden and raise our growth potential further, and next year is a truly critical moment — the budget has been allocated accordingly."

He added that while industry and the broader economy are growing, "K-shaped polarization is unfortunately deepening," and that the emphasis on welfare and improving the lives of individual citizens had made a larger budget "unavoidable."

Ryu described the budget's character in four terms — improving people's lives, walking alongside citizens, equal opportunity, and opening the future — and outlined plans to support youth. On support for regional national universities, he said tuition would be free for freshmen at 30 national universities. "Starting next year, freshmen who choose a regional national university will be able to attend without worrying about tuition," he said.

On future growth, Ryu said the government intends to aggressively nurture not only three major mega-projects but also seven seed industries. "Where research and development and commercialization are needed, we will actively foster them," he said.

On the tax windfall underpinning the large-scale spending, he projected that corporate tax revenue next year "will likely come in at more than 200 trillion won, thanks to the semiconductor boom." He added that total national tax revenue next year would exceed around 580 trillion won, calling the semiconductor-driven corporate tax the single biggest factor.

On the 162.3 trillion won future-response fund, Ryu said it was designed to "temporarily hold water in a fiscal reservoir, so to speak, and draw on it appropriately when needed — to prepare for and respond to the future."

Responding to criticism that the fund lacks adequate oversight because up to 30 percent of its line items can be reallocated without National Assembly review, Ryu said all spending — whether from a fund or general accounts — goes through the Assembly's budget deliberation process. He said flexibility within the fund was necessary because, for example, the price of high-end GPUs needed to develop frontier-level AI could spike suddenly. "When new projects end up requiring more fiscal resources than expected, this gives us a degree of flexibility so we don't have to resort to a supplementary budget," he said. He added that a mechanism had been put in place requiring immediate reporting to the Assembly whenever such spending needs arise.

On criticism that fiscal and monetary policy are out of sync — given the Bank of Korea's benchmark interest rate hike to 3.0 percent — Ryu said there are sectors and groups suffering from high borrowing costs, "and that is precisely where fiscal policy has a role to play." He noted that the managed fiscal deficit is projected at just 0.1 percent of gross domestic product next year, "which is essentially balanced."

On the youth savings-matching program, which has drawn "cash handout" criticism after income eligibility restrictions were lifted, Ryu pushed back. "The youth savings program is not about giving out money," he said. "It is about helping young people build assets by contributing their own savings and receiving a matching rate of 5, 6, or 12 percent. We expanded eligibility because we felt everyone deserves an equal opportunity."


sunpine@heraldcorp.com