Volatile Tax Revenue Tied to Semiconductors; Experts Urge Tax Base Expansion

South Korea's tax revenue is experiencing significant fluctuations, largely driven by the volatile semiconductor industry, prompting calls for a fundamental overhaul of the existing tax system. Experts argue that the current revenue structure, which swings with the fortunes of specific industries like semiconductors, is insufficient to guarantee stable funding for essential social programs and safety nets.

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Rather than resting on the current tax revenue boom, we must establish a sustainable tax base through expenditure restructuring.

The nation's tax income has been heavily impacted by the semiconductor market's performance in recent years. For instance, in the previous year, approximately 60% of the increase in national tax revenue stemmed from corporate taxes, which in turn were boosted by the semiconductor boom during the COVID-19 pandemic. However, as the semiconductor industry slowed in 2024, corporate taxes and total national tax revenue saw a significant decline.

This dependency highlights the vulnerability of the national budget to industry downturns. Experts emphasize the need to move beyond the current revenue surplus and establish a sustainable tax base through measures like expenditure restructuring. Some suggest converting tax expenditures, such as tax exemptions, into direct government spending for welfare initiatives to address widening inequality.

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The current income tax system operates by enumerating taxable income, creating tax gaps for new forms of income. We must adopt the principle of comprehensiveness, taxing according to economic capacity regardless of the source or form of income.

Furthermore, there are suggestions to increase South Korea's tax-to-GDP ratio, which remains lower than the average among OECD member countries. Discussions also include potentially shifting from an enumerative system, where taxes are levied only on explicitly listed income types, to a comprehensive principle similar to Japan's, which taxes income regardless of its source or form based on economic capacity. The debate also touches upon the future implications of artificial intelligence, with early discussions about potential "robot taxes" to address job displacement and inequality.

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If we introduce robot taxes first in our country, advanced companies from overseas will be reluctant to invest here, and domestic companies will also hesitate.