Lee Hyeong-il vows tax reform, fair taxation and housing supply push

Deputy Prime Minister and Minister of Economy and Finance Lee Hyeong-il said Tuesday the government would overhaul the tax system to support a rebound in potential growth, strengthen support for youth, low-income households and regional communities, and achieve fair taxation through measures including rationalizing real estate taxes and redesigning the family business inheritance deduction.

Lee made the remarks in an opening address at his first National Assembly audit by the Finance and Economy Planning Committee since taking office, pledging to "devote all efforts to stabilizing the livelihood economy and easing polarization."

Lee said the government would prioritize stable price management as the foundation of the livelihood economy. "We will stabilize prices for everyday necessities such as petroleum products and food, respond firmly to unfair practices that distort prices, and work to ease the cost-of-living burden on vulnerable groups," he said.

Housing, employment and financial services for ordinary citizens will be pursued as three core social policies. On housing, the government will make expanding supply its top priority — including moving swiftly to deliver about 1.19 million public housing units under the "Housing Stability Plan" announced in September. Vulnerable borrowers at risk of mounting debt burdens amid rising interest rates will receive active debt restructuring and tailored financial support.

On employment policy, Lee said the government would "create pathways to quality jobs and training opportunities for those with the will and ability to work, so that the fruits of economic growth can spread broadly through employment."

The government will continuously monitor conditions in sectors with weak hiring — such as manufacturing and construction — and develop sector-specific responses. It will also work to ease the gap in working conditions by employment type and company size to improve the labor market's dual structure and expand protections for vulnerable workers.

The government will also move to close gaps across generations, regions and businesses. Youth will receive comprehensive support at each stage of life — covering not only jobs but also education, housing, asset building, marriage and child-rearing. The government plans to revitalize traditional markets by linking them to regional tourism and culture, support the development and commercialization of everyday consumer products, and reform tax and fiscal support systems to promote investment and growth among small and medium-sized enterprises.

A "national land transformation" initiative will also be actively pursued to break away from a Greater Seoul-centered structure and achieve co-growth between the regions and the capital area.

The government will also accelerate efforts to improve the business investment environment and raise potential growth. "We will push forward the three mega-projects with urgency and swiftly resolve on-the-ground difficulties facing businesses to create a world-class business environment," Lee said.

The government will provide full support for the seven next-generation SEED projects and establish a new fund to strengthen momentum for strategic exports. Existing ultra-innovation economy projects will be carried forward without disruption while new initiatives are identified in parallel.

The government will also pursue legislation of a basic law on service industry development to make the service sector another pillar of economic growth, and will identify and nurture diverse fields including high-value-added and everyday services. A "Korean-style green transformation strategy" will also be drawn up by year-end to strengthen green competitiveness through achieving carbon neutrality goals and decarbonizing the industrial structure.

On the external front, the government will pursue the Korea-US strategic investment project and shipbuilding cooperation investment. "We will advance the Korea-US strategic investment project with commercial rationality and strategic interests in mind, and support Korean companies' entry into the US market through approximately $150 billion in shipbuilding cooperation investment," Lee said. The government will also push to introduce a "Korean-style strategic sovereign wealth fund" to systematically accumulate national wealth and provide long-term patient capital for strategic industries.

Trade issues — including US tariff measures and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership — will be actively monitored to minimize uncertainty, and economic cooperation through bilateral and multilateral channels with major countries will be channeled into overseas contracts and exports for Korean businesses.

Alongside this, the government will work to stabilize the foreign exchange market amid both upside and downside uncertainties stemming from the war in the Middle East and major countries' monetary policies. On supply chains, Lee said the government would "respond to external uncertainty through alternative sourcing and supply stabilization measures, and over the long term fundamentally improve supply chain structures to enhance resilience."

The government will implement won internationalization — transitioning the currency from a "regulated currency" to a "freely convertible currency" — and pursue institutional reforms to improve market access for foreign investors in domestic securities investment. It will also expand communication with investors to identify and resolve on-the-ground difficulties, and proactively build up external soundness buffers to maintain the country's record-high sovereign credit standing.

The government will establish an institutional foundation for Korean-style development finance to support large-scale development projects in developing countries, create a signature model for Korean AI-based Official Development Assistance, and strengthen governance of the Economic Development Cooperation Fund.

In the fiscal and public sector, the government will shift the paradigm for state property management from ownership and preservation to operation and value creation. It will also strengthen the efficiency and accountability of treasury fund execution through improvements to the fund allocation system and the use of blockchain.

On restructuring public institutions, Lee said the government would "strategically redeploy public institution functions to respond to complex policy environment changes such as the AI transformation and regional depopulation," adding that it would "reform the public service delivery system to be more demand-oriented by consolidating overlapping functions, while integrating subsidiaries and small agencies to cut costs and eliminate blind spots in oversight."

Strengthening the overall coordination of economic policy was also cited as a key task. The government will enhance communication and collaboration among related ministries through economic ministerial meetings and economic issue consultations to improve policy speed and momentum, and will share and discuss priority legislation and key issues with the National Assembly to stabilize livelihoods and raise potential growth.

Assessing the current economic situation, Lee said the economy was showing expanding growth momentum — with major indicators such as exports and investment performing well on the back of a global semiconductor boom, with growth of around 3 percent expected. At the same time, he cautioned that structural problems persist, including sectoral polarization and slowing potential growth, amid prolonged high oil prices that continue to weigh on livelihoods, while external uncertainty remains elevated due to factors such as the war in the Middle East.

"The Korean economy now stands at a critical crossroads where it must achieve a great leap forward, building on its recovered growth momentum toward an irreplaceable Korea," Lee said. "The government will do everything in its power to lay the groundwork for a rebound in potential growth while ensuring the warmth of that growth spreads evenly to all citizens."