Deputy Prime Minister Nominee Faces National Assembly Confirmation Hearing
"Reviewing Tax Exemptions and Reductions to Secure Resources"
On July 17, Koo Yooncheol, the nominee for Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance, addressed the need for a corporate tax rate increase, stating, "I will actively review the issue, considering factors such as the ability-to-pay principle (taxation based on taxpayers' capacity) and its effectiveness."
During his confirmation hearing at the National Assembly on the same day, Koo responded to Democratic Party lawmaker Oh Ki-hyung's remark that the corporate tax rate, which was lowered during the previous Yoon Suk-yeol administration, should be restored to its previous level. The current top corporate tax rate in South Korea is 24%. The rate was reduced by 1 percentage point through a tax law revision in 2022 under the Yoon administration.
Koo explained, "I believe the Yoon Suk-yeol administration expected that lowering taxes would encourage companies to invest, which would then create a virtuous cycle. However, after reviewing tax revenues, I found that national tax revenue decreased from 396 trillion won in 2022 to 337 trillion won in 2024, and corporate tax revenue dropped from nearly 100 trillion won in 2022 to about 60 trillion won last year, a 40% decrease. This has led to declines in growth, consumption, and investment."
He also stated that he would "actively consider" restoring the securities transaction tax to its previous level.
Koo emphasized, "We must secure resources from somewhere to achieve a true transformation of Korea. We will comprehensively review the effects of tax reduction policies and other relevant factors."
In response to Democratic Party lawmaker Park Honggeun's comment that "economic innovation is not possible without resources," Koo said, "We will review tax exemptions and reductions to expand the tax base."
Koo added, "To achieve an AI-driven transformation, we need to invest resources. To this end, we will review tax exemptions and reductions, as well as secure resources by addressing tax evasion and rationalizing tax equity."
When questioned by lawmaker Ahn Dogeol about the need to rationalize the tangled tax system and tax administration, Koo stressed, "There must be a balance in tax policy, where those who can bear the burden do so, while the burden on vulnerable groups is reduced. I will review the overall tax system."
Regarding improving the accuracy of tax revenue forecasting, Koo said, "We are considering working with private sector experts on revenue forecasting and seeking technical advice from the Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF) to understand how advanced countries forecast tax revenues. We are also reviewing methods to use real-time data and AI to achieve more accurate tax revenue forecasts."
Koo also expressed his intention to establish a dedicated AI Bureau to oversee President Lee Jaemyung's pledge of a 100 trillion won investment in artificial intelligence (AI). He stated, "If I am appointed as Minister of Economy and Finance, I will restructure existing departments to create a new AI Bureau."
Regarding President Lee Jaemyung's campaign pledge of a "100 trillion won AI investment," Koo explained that the 100 trillion won investment would include not only government funding but also private capital.
In his opening statement on the same day, Koo said, "We will apply AI to existing key industries such as petrochemicals and automobiles to advance them, and we will take a new approach to foster ultra-innovative industries by integrating AI technology into advanced strategic sectors such as quantum, space, bio, energy, K-culture, and defense."
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