Park Hong-keun: Next year's tax revenue to top W500tr, with surplus channeled into future fund

The government expects national tax revenue to surpass 500 trillion won ($332 billion) in 2027 for the first time in history, buoyed by a strong semiconductor cycle.

Total expenditure is set at more than 800 trillion won — up more than 10 percent from this year and the largest budget in history — with fiscal resources directed first toward strategic investments in future growth engines such as semiconductors and AI.

Minister of Planning and Budget Park Hong-keun unveiled the government's 2027 budget framework and medium-term fiscal management plan Monday at the 2026 National Fiscal Strategy Conference, held at the Yeongbingwan reception hall of Cheong Wa Dae.

"National tax revenue in 2027 is expected to far exceed the original projection of 412 trillion won, reaching 500 trillion won and beyond — the largest tax haul in history," Park said. "This is a once-in-a-lifetime opportunity and an invaluable source of funding to prepare South Korea for the next 20 years."

He acknowledged a range of views on how to use the windfall. "There are voices ranging from those who argue we must invest aggressively — that missing this chance would be a regret — to those who urge caution and call for a fiscal stabilizer," Park said. "We cannot afford to squander such precious revenue all at once."

Park stressed the need for a "Future Response Fund." "We will accumulate large-scale tax revenue increases that exceed long-term trends into the fund," he said, "and invest them intensively in four priority areas — youth, growth engines, regional development and talent — going beyond single-year spending plans."

He added that the fund would also serve as a fiscal buffer. "When a tax shortfall arises due to changing economic conditions, or when a supplementary budget is needed, we will draw on the fund's available resources to reinforce fiscal capacity in a timely manner and contribute to fiscal stabilization," Park said.

Taking into account improved revenue conditions and the need to expand strategic investment, the government plans to set total 2027 expenditure at more than 800 trillion won, an increase of more than 10 percent from this year. The figure would mark the largest budget in the country's history.

To finance the plan, the government will pursue roughly 50 trillion won in spending restructuring — about double last year's level. It plans to make budget efficiency a standing effort through task force operations and public proposals.

"Working with experts, we will review every spending program from a zero base and cut discretionary spending by up to 15 percent, mandatory spending by up to 10 percent, and eliminate up to 10 percent of programs — the deepest cuts ever," Park said. "We will make every effort to reduce the fiscal burden on future generations."

He added that integrated performance evaluations would be used to identify underperforming programs. "As a rule, programs flagged for reduction will be cut by at least 15 percent, and programs slated for elimination will be cut entirely, and this will be reflected in the 2027 budget," Park said.

Among examples of spending efficiency measures, Park cited the elimination of commuter bus services for civil servants in the Greater Seoul area and a comprehensive review of small and medium-sized enterprise support programs across ministries, resulting in 4 trillion won in cuts across 99 programs in 17 ministries.

The government also plans to reform the local education subsidy system and the basic pension regime to secure additional funding.

"The resources secured will be reinvested in irreplaceable core national projects," Park said. He outlined plans to designate semiconductors, AI data centers and physical AI as three mega projects to receive priority fiscal support.

Additional priority areas for fiscal investment include regionally led growth through infrastructure, development hubs and K-culture; building a growth ladder for youth, startups and small business owners; reducing polarization through proactive welfare; and strengthening national safety and peace through security, self-reliant defense, economic security and practical diplomacy.

"We will provide backing so that corporate investment proceeds without disruption," Park said. "We will advance next-generation technology and research and development projects to build a robust industrial ecosystem."

Addressing concerns that an expansionary budget could increase national debt, Park said the answer was clear. "Starting next year, both the fiscal balance and the national debt ratio will show marked improvement," he said.

On the fiscal management direction for the next five years, Park said 2026 and 2027 would see preemptive and expansionary fiscal deployment on the back of increased national tax revenue.

"From 2028 onward, as the results of those investments begin to materialize, we will gradually stabilize the rate of expenditure growth," he said. "As a result, the managed fiscal balance will improve on the original plan in every year, and the national debt ratio will be kept lower in 2030 than the target originally set for 2029."

Park said the government aimed to end unproductive fiscal debates and achieve the highest level of national creditworthiness on record.