Editorial: The 820 trillion-won growth budget needs stronger measures to ease polarization

South Korea’s proposed 2027 budget puts 820.9 trillion won behind growth, the largest increase on record. The government plans to direct tax revenue boosted by an artificial intelligence and semiconductor boom toward future industries, regional development and younger generations.

The plan also presents an unusual fiscal picture. Despite a 12.8% increase in total spending, the managed fiscal deficit is projected to narrow from 3.9% of gross domestic product this year to 0.1% next year. The national debt ratio is expected to fall from 50.6% to 48.3%. A new 162 trillion-won Future Response Fund will be managed in a separate account, reflecting the government’s intention to save part of the windfall for longer-term needs.

The largest allocations include 84 trillion won for three major projects, including semiconductors, and artificial intelligence; 43 trillion won for young people; and 33 trillion won for locally led growth. The editorial views the focus as reasonable for competing in advanced industries and narrowing regional and generational gaps.

Its concern is that distribution measures remain comparatively thin. Spending on industry, small and medium-sized businesses and energy will rise 29.7%, while health, welfare and employment spending will increase 9.3%. The editorial says the government must address possible job losses linked to artificial intelligence and worsening housing conditions caused by soaring metropolitan property prices. It welcomes combined support for young people’s jobs, housing and asset building, but calls for help to extend to middle-aged unemployed people and households without homes.

The government also plans to submit a tax revision restoring the basic deduction for comprehensive real estate tax on nonresident single-home owners from 900 million to 1.2 billion won. The editorial supports clarifying the rule, while insisting that taxation of ultra-expensive homes and preferential treatment for owner-occupiers should remain principles of the policy.