(Bloomberg) -- South Korea expects to reap a record tax windfall from the artificial intelligence-driven semiconductor boom, giving President Lee Jae Myung's government fresh fiscal firepower to fund an ambitious investment agenda.
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The government boosted its 2027 tax revenue estimate to 500 trillion won ($331.6 billion), far surpassing an earlier forecast of 412.1 trillion won, according to Budget Minister Park Hong Keun Monday. The revenue surge will allow the government to propose a budget of more than 800 trillion won, compared with this year's 727.9 trillion won, marking the largest spending plan in the country's history.
"This is a once-in-a-generation opportunity and a valuable source of funding to prepare South Korea for the next 20 years," Park said during the government's annual fiscal strategy meeting chaired by Lee. "We cannot afford to spend this precious revenue all at once."
A key pillar of the plan is the creation of the so-called "Future Response Fund," which would channel tax receipts above their long-term trend into strategic investments, rather than one-off spending. The fund would focus on four priorities: younger generations, future growth engines, regional development and talent cultivation, Park said.
The proposal formalizes President Lee's strategy of deploying the tax windfall generated by the chip upcycle into long-term investment. The government plans to create additional fiscal space through what it described as restructuring of existing spending, rather than relying solely on stronger tax collections, Park added.
The new fund will also help finance Lee's signature economic agenda, including the three mega projects unveiled earlier this month focused on semiconductors, AI data centers and physical AI. The administration has pledged policy support for at least $880 billion of corporate investment led by companies including Samsung Electronics Co. and SK Hynix Inc.
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