The Ministry of Planning and Budget and the Ministry of Education clashed over a revamp of the grant-in-aid (earmarked tax). The issue is whether to keep the current structure that automatically allocates 20.79% of the national tax to educational finance.
The Ministry of Planning and Budget and the Korea Development Institute (KDI) argued that the current structure should be adjusted in light of the decline in the school-age population and tax revenue volatility, but the education sector countered that fewer students do not necessarily mean lower educational demand and said the current grant rate should be maintained.
The Ministry of Planning and Budget and the Ministry of Education held a 90-minute public debate on the theme of "revamping the earmarked tax" at Government Complex Seoul on the 8th. This came together after President Lee Jae-myung proposed it at a Cabinet meeting on the 30th of last month.
◇ Ministry of Planning and Budget and KDI: "Stop automatic allocation and assess the appropriate needs"
The Ministry of Planning and Budget says it is necessary to move away from the national tax-linked structure that has been rigidly operated since the 1970s and create a new formula that reflects the "decline in the school-age population." The amount of the earmarked tax allocated this year is 76 trillion won, and with a large influx of excess semiconductor-related tax revenue expected this year, the size of the earmarked tax is also set to grow further.
Kim Hak-su, a senior research fellow at KDI, likened the current earmarked tax system to "a structure that automatically transfers more money into the elementary, middle and high school education account just because salaries went up, even though there are fewer children to educate." Kim said, "The question is whether to keep the automatic transfer system or to pause and determine how much education funding is needed," adding, "Resources should be allocated rationally according to the priorities of the times."
Minister Park Hong-geun of the Ministry of Planning and Budget said, "We are not trying to reduce the earmarked tax, as the education sector fears," adding, "We will increase both the aggregates of the earmarked tax and the per-student earmarked tax every year, ease the boom-and-bust swings in educational finance caused by tax revenue fluctuations to ensure stable operations, and reinvest the surplus funds secured through the revamp into higher, early childhood and lifelong education."
◇ Education sector: "Fewer students do not mean lower educational demand"
The education sector signaled that securing "stable educational finance" is important and that the "20.79% framework" must be defended. Minister Choi Kyo-jin of the Ministry of Education said, "The 20.79% is a strong legal safety net agreed upon by society so that education can proceed without being shaken by unpredictable economic fluctuations and political situations."
There was also the argument that a decline in the school-age population does not directly translate into lower educational demand. Lee Sun-ho, head of the Future Education Research Division at the Korean Educational Development Institute (KEDI), said, "If schools in the past were places of instruction, today's schools have expanded roles, including care, welfare, emotional support and safety management, and they are being held more firmly accountable for them," adding, "The reason Korea's per-capita spending on elementary and secondary education is high is that it includes educational activities not undertaken overseas, such as school meals, after-school care and safety management."
Seoul Education Superintendent Jung Keun-sik said, "Education offices are now responsible for early childhood and lifelong education, and we are considering partially supporting universities (higher education) as well," adding, "Is it not possible to carry out these roles while keeping 20.79%?"
◇ Broad agreement on expanding investment in higher, early childhood and lifelong education, but disagreements on funding sources
Meanwhile, participants generally agreed on the need to expand investment in higher education, early childhood and lifelong education. Seoul National University Professor Yoo Jae-joon said higher education is in a state of "fiscal malnutrition," and Seoul National University Professor Kang Dae-jung pointed to a "decline in adult competencies and a lack of lifelong education finance." Hwang Ok-kyung, head of the Korea Institute of Child Care & Education (KICCE), also emphasized the "securing of stable funding to close gaps in early childhood education and care."
However, opinions diverged on how to raise the necessary funding. Minister Park Hong-geun saw balanced investment as possible through a revamp of the earmarked tax formula, while Minister Choi Kyo-jin said, "We should keep the 20.79% framework, but find ways to use it for higher, early childhood and lifelong education."