Minister of Planning and Budget Park Hong-keun announced that plans are currently underway to modify the structure that allocates 20.79% of internal taxes to the local education finance grant, adding that a bill will be proposed soon to undergo parliamentary review.

Appearing on KBS Sunday Diagnosis today (the 26th), Minister Park stated, "As the scale of internal taxes has grown, we are now in the process of breaking the structural linkage of 20.79% to devise a new plan." He added, "We are currently consulting with the Ministry of Education, and once government opinions are coordinated soon, we plan to submit this in the form of a bill for review by the National Assembly."

Noting that the current internal tax linkage system was "introduced in the 1970s when 1 million babies were born in a single year," he implied that it is no longer reasonable given the current situation where annual births have dropped to the 200,000 range.

However, Minister Park introduced the principles regarding the reform of the education finance grant, saying, "Should we not also make elementary, secondary, and kindergarten education more substantial?" He added, "We will not reduce investment. We will continue to invest in line with long-term trends."

He explained that the total amount of grants—currently about 13 million won per student annually—will not be reduced, and the saved financial resources will be put to greater use in higher education, lifelong education, and early childhood education, noting, "We need to reflect the decline in the school-age population in some way."

Minister Park reaffirmed his vision to reorganize the basic pension, which provides a fixed monthly amount to the bottom 70% of senior citizens aged 65 and older, into a structure that provides more to lower-income earners while reducing benefits for higher-income earners.

Pointing out that the basic pension "was introduced with the intent of reducing the elderly poverty rate, which certainly had some effect," he noted, "As it is provided up to the bottom 70%, we have now reached a situation where individuals receive (pensions) up to the 4.6 million to 4.7 million won range in individual income, and two-person households reach about 7 million to 8 million won."

Mentioning the median standard income by stating, "This refers to lining up the entire national income and speaking of the midpoint among them," Minister Park said, "If we reorganize anew based on that standard, we will be able to provide thicker support to those who are struggling."

Conveying the status of discussions, he said, "We have already reached the final stage of discussions with the Ministry of Welfare for such a design."

The median standard income is the median value of national household income announced by the Minister of Health and Welfare after deliberation and resolution by the Central Living Security Commission, used for standards of basic livelihood security benefits and other purposes.

This year's median standard income is set at 2,564,238 won for a one-person household, 4,199,292 won for a two-person household, and 5,359,036 won for a three-person household.

Regarding next year's budget bill—for which total expenditures were previously projected to reach 800 trillion won plus alpha (α)—Minister Park stated that it will be prepared "in a direction felt in the lives of the public," focusing on three mega-projects, rebounding potential growth rates, and building social safety nets for vulnerable groups.

Addressing concerns that an expansionary fiscal policy could prolong the high-inflation trend and increase burdens on ordinary citizens, he stated, "While pursuing an active fiscal policy, we must ultimately approach it in a direction that minimizes the impact on inflation."

Mentioning remarks by Bank of Korea Governor Shin Hyun-song that "if fiscal policy leads to investment that can further increase the growth capacity of the economy as a whole, it does not necessarily have to fall out of sync with monetary policy," Minister Park explained that focus will be placed on tailored fiscal support, intensive investment to drive potential growth rates, and expanded support for vulnerable groups.

He noted that the Future Response Fund, to be established utilizing tax revenues significantly higher than expected due to the semiconductor boom, originated from the idea of "using it for productive spending that opens up South Korea's future growth engine," and previewed that it will be utilized for strategic investments to expand growth potential or as a fiscal stabilization device.

Minister Park cited the youth generation, securing growth engines in the AI (artificial intelligence) era, supporting regional areas (outside the capital region), and fostering talent as major areas of strategic investment.

Regarding the role of the Future Response Fund as a fiscal stabilization device, he gave examples such as "reinforcing fiscal capacity to make good use of it, including such surplus funds, when tax revenue shortfalls occur or supplementary budgets are urgently needed."

Emphasizing that the Future Response Fund differs from existing budget policies, he stated, "If we just spend everything on a one-year basis, can we achieve all those results within a single year? Considering that it would not be reasonable to execute such precious financial resources entirely within a single-year term, it contains the intent to overcome the limitations of single-year budget and accounting principles."

He added that policies will be promoted based on national consensus, and if the fund is established pursuant to the National Finance Act, legal procedures such as enacting legislation will be thoroughly complied with.

Minister Park introduced that to support region-led growth, including the "5-megaregion and 3-special-self-governing-province" strategy, ultra-wide-area accounts will be established, industries to serve as growth engines for each region will be selected, and improvements to residential environments outside the capital region will be pursued.

Explaining that the ultra-wide-area accounts among these are intended to "provide greater fiscal support suited to wide-area regions," he stated, "We will create a larger fiscal container and provide more money next year in the special account for balanced regional development that regions can use more comfortably."

(Photo: Yonhap News)