The National Assembly has entered a full-scale budget season with a public hearing on the 2026 budget bill. As the Lee Jae-myung administration submitted to the National Assembly a record-high 728 trillion won budget, up 8.1% from this year, a fiscal expert at the hearing said the government debt ratio is rising and warned of a possible currency crisis. The Democratic Party of Korea countered that there is no issue with an expansionary fiscal stance because corporate tax receipts will increase at Samsung Electronics and SK hynix as their operating profits rise on the back of a semiconductor boom.
The Special Committee on Budget & Accounts held a "2026 budget bill public hearing" at the National Assembly on the afternoon of the 5th. In accordance with the National Assembly Act, the committee holds a public hearing every year before reviewing the government's budget bill. Testifying at the hearing were Kim Dae-jong, a professor in the School of Business Administration at Sejong University; Yang Jun-mo, a professor in the Department of Economics at Yonsei University; Woo Seok-jin, a professor in the Department of Economics and Statistics at Myongji University; Lee Tae-seok, a senior fellow at the Korea Development Institute (KDI); and Cho Young-cheul, an adjunct professor of economics and finance at Hanshin University.
The hearing proceeded with ruling and opposition lawmakers questioning presentations by witnesses from the People Power Party side, Professors Kim Dae-jong and Yang Jun-mo, and from the Democratic Party side, Professor Woo Seok-jin, Senior Fellow Lee Tae-seok, and Professor Cho Young-cheul. Witnesses from the Democratic Party side argued that "an active fiscal role is needed for economic growth," while witnesses from the People Power Party side warned that "if expansionary fiscal policy worsens soundness, a currency crisis will occur."
In particular, Cho Young-cheul, who served as the Blue House fiscal planning director during the Moon Jae-in administration, brought up next year's corporate taxes in connection with the worsening fiscal balance. He said that because the Ministry of Economy and Finance's budget bill submitted to the National Assembly does not reflect corporate tax revenue from semiconductor companies whose operating profits are expected to rise, the government still has ample fiscal room even if it increases expenditure.
Cho said, "It is unlikely that the Ministry of Economy and Finance took into account the surge in operating profits in the semiconductor industry when estimating national tax revenue," adding, "Next year, corporate income at Samsung Electronics and SK hynix will increase enormously, generating massive excess tax revenue, and considering this excess revenue, (the current budget bill) is strong austerity."
Members of the Democratic Party serving on the budget committee continued questions in line with Cho's view. Democratic Party lawmaker Kim Nam-geun said, "According to the fourth-quarter outlook, Samsung Electronics is projected to rise to 17 trillion won in operating profit, and SK hynix to 13.6 trillion won. Looking at just these two companies, corporate tax revenue will increase." Lawmaker An Do-geol of the same party also said, "Samsung Electronics' operating profit is the highest in the past three years and SK hynix's is at a record high. We are optimistic on the revenue side."
In fact, corporate tax revenue is expected to increase next year. In its analysis of next year's budget bill, the National Assembly Budget Office projected corporate tax revenue at 87.5 trillion won. That is 900 billion won more than the government's budget bill. The effect of improved corporate performance and the government's 1 percentage point (p) increase in the corporate tax rate from the current 9%–24% to 10%–25% was reflected.
From the People Power Party came criticism that, regardless of excess tax revenue through corporate taxes, the government's expansionary fiscal stance will increase the fiscal burden. There was also a view that, rather than budgets for health, welfare, employment, and education, priority should be given to building up foreign exchange reserves to prevent a credit rating downgrade. They argued that fiscal resources should be injected to increase foreign exchange reserves from $420 billion (about 606.9 trillion won) to $1 trillion (about 1,445.1 trillion won).
Choi Hyeong-du, a People Power Party lawmaker, said, "Foreign exchange reserves are so serious that we again worry about a currency crisis," adding, "Even though there was 10 trillion won in excess tax revenue during the Moon Jae-in administration, it saddled us with 500 trillion to 600 trillion won in debt, so if we continue on this course for five full years, there must be a solid foundation for how to manage the debt."
Park Hyeong-su of the same party, the opposition secretary of the budget committee, said, "By formulating an expansionary budget, government debt will reach 1,425 trillion won, and the debt ratio will rise to 51.6% of gross domestic product (GDP)," stressing, "The most worrisome part is that government debt could lead to an international credit rating downgrade, and to overcome and weather various financial crises ahead, fiscal rules are needed."