South Korea Eyes 79 Trillion Won Education Grant Under New Formula

South Korea's government has unveiled a revised plan for the local education and tax grant, estimating the total allocation for next year at approximately 79 trillion won. This figure, while lower than some projections under the previous system tied to national tax revenue, represents a significant increase compared to pre-supercycle estimates.

The new formula moves away from the previous system, which automatically allocated 20.79% of national tax revenue to education grants. Under the old system, booming corporate taxes from the semiconductor industry could have pushed the education grant close to 100 trillion won next year. Critics argued this was excessive given the declining student population.

Government officials explained that the revised formula incorporates factors such as inflation and the declining school-age population. This approach aims to moderate the grant's growth compared to the previous fixed percentage system. Despite the removal of the direct link to national tax revenue, the government asserts that the new system will ensure a substantial grant amount for the foreseeable future, exceeding previous mid-term projections.

Furthermore, the government emphasized that funds not allocated through the revised grant will be channeled into a separate "Future Response Fund" for early childhood, higher, and lifelong education. This ensures that overall investment in education remains robust. Officials stated that the current estimates are conservative and sufficient to cover future personnel costs and educational demands, even with a significant drop in the school-age population over the next five years.