President Lee Jae-myung: Surplus tax revenue to fund future growth engines

South Korean President Lee Jae-myung announced plans to strategically invest a significant surplus in tax revenue, generated largely by a booming semiconductor industry, into developing the nation's future growth engines. He firmly stated that utilizing these excess funds for general expenditure or debt repayment would be a "foolish" approach, advocating instead for investments that enhance South Korea's growth potential.

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It is foolish to use it for general spending or to pay off debt.

During a press conference marking his first year in office, President Lee highlighted the declining trend in the country's potential growth rate, which he noted has fallen by approximately 1% point per presidential term, now estimated to be below 1.5%. He stressed that increasing this potential growth rate is a critical task, and simply repaying debt will not achieve this goal. Lee also criticized the practice of adjusting spending based on fluctuating revenues as abandoning the role of fiscal policy.

Instead, the president outlined a vision for "large-scale investments" in areas essential for the nation but where private sector involvement may be limited. The government is reportedly considering a dual strategy: establishing a dedicated fund to invest surplus revenue for future generations and creating a sovereign wealth fund to finance new growth industries. This approach aims to secure long-term economic vitality.

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We will make large-scale investments in areas that the private sector cannot easily undertake but are essential for the nation.

Regarding the contentious issue of "excess profits" within corporations, President Lee suggested that international discussion is necessary. He acknowledged the exceptionally high profit margins, with some companies exceeding 75% operating profit rates, and noted the debate over how these profits should be distributed among various stakeholders, including workers, investors, and the public who have supported companies through R&D investment and tax benefits. However, he cautioned against unilateral adoption of measures like an "AI tax" or "robot tax" in South Korea, fearing it could deter foreign investment and negatively impact national industrial policy. He emphasized the need for global consensus on such complex issues.

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It is not an issue that can be resolved solely through domestic debate.