Commissioner Kwanghyun Lim: “Future Response Fund Needed Using Semiconductor Boom Tax Revenue”

Concerns Over a "Concentration-Type Tax Revenue Portfolio"
"A Virtuous Cycle of Fiscal Sustainability and Fostering New Industries Is Needed"

Kwanghyun Lim, Commissioner of the National Tax Service, stated that it is urgent to establish a “Future Response Fund” utilizing the recent surge in tax revenue generated by the semiconductor supercycle (period of extraordinary boom) as a financial resource in order to secure the sustainability of the nation’s finances.

Kwanghyun Lim, Commissioner of the National Tax Service.

On July 12, Lim posted a message titled “Today’s Tax Revenue Must Become Tomorrow’s Competitiveness” on his X (formerly Twitter) account, emphasizing, “Sustainable fiscal management depends not only on how much tax revenue is secured, but also on how stably it is secured.”

He defined the fluctuating tax revenues caused by semiconductor industry cycles since 2000 as a “concentration-type portfolio,” and remarked, “As someone responsible for the state’s tax income, I am always concerned.” He pointed out, “When the semiconductor industry is booming, tax revenue—especially corporate tax—rises rapidly, but when the cycle slows, corporate performance deteriorates and tax revenue also falls, repeatedly making fiscal management difficult.” Although the average tax revenue growth rate over the past 20 years has been 5.71%, Lim noted that the amplitude of these fluctuations was excessive due to the semiconductor market cycle. For example, in 2021, tax revenue increased by 20.6% over the previous year thanks to a pandemic-driven semiconductor boom, but two years later, it fell by 12.6% due to weakened demand for information technology (IT).

Lim suggested, “From the perspective of diversifying the tax revenue portfolio, we must continue to foster semiconductors as a core competitive industry and strengthen our global technological advantage as a super-gap industry,” adding, “We should also actively invest in and foster new strategic industries that will serve as future growth engines.” He further stated, “This will not only secure future growth momentum but also diversify the industrial structure,” predicting, “In the long term, this will lead to a virtuous cycle of building a more balanced and stable tax revenue base.”

He went on to stress, “Therefore, a plan to establish a ‘Future Response Fund’ to utilize additional tax revenue from the semiconductor boom for supporting the three major mega projects and enhancing the nation’s long-term competitiveness is an essential policy.” He also expressed his expectations that, “From the perspective of a tax agency, this will allow us to secure both the sustainability of public finances in preparation for growing welfare needs due to low birth rates and an aging population, and tomorrow’s competitiveness at the same time.”

This content was produced with the assistance of AI translation services.