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South Korea to fund youth and AI with semiconductor tax windfall plan
The planned Future Response Fund would be financed mainly by tax revenue above a benchmark growth formula, with excess receipts saved in strong years to cushion weaker periods.
South Korea plans to create a new Future Response Fund to channel tax windfalls from the semiconductor boom into youth programs and investment in future growth industries including artificial intelligence, the budget ministry said. The government also linked the effort to an education funding overhaul aimed at shifting resources toward talent development and lifelong learning.
According to the ministry, the fund would be financed mainly by tax revenue that exceeds a benchmark based on average growth in domestic tax receipts over the past decade. The proposal would accumulate excess tax revenue in strong years that could later be used to help cushion periods of weaker revenue.
South Korea’s chipmakers, including Samsung Electronics and SK Hynix, have seen earnings rise as demand has surged during the AI boom. The government did not provide an official estimate of the fund’s size, though South Korean media said it could exceed 100 trillion won, or about $72.28 billion, based on projections for next year’s tax revenue and expected inflows from other sources.
The youth programs would be designed to support employment, home buying, and starting families, while investments in growth industries would focus on AI and other strategic technologies. The ministry said the related legislation would be submitted to parliament alongside its 2027 budget proposal next month, as President Lee Jae Myung seeks to address low birth rates, housing affordability concerns, and labor market challenges, Reuters reported.