(Sejong = Yonhap News) Reporters Lee Se-won, Lee Dae-hee, and Song Jeong-eun = The Finance and Economic Planning Committee expressed concern that the Future Response Fund could weaken the National Assembly's financial control.
Considering the nature and size of the Future Fund, it was suggested that the government's discretion may be excessively large and that sustainability may become uncertain or the foundation of core financial resources may be shaken due to economic fluctuations.
There are predictions that a heated debate will take place in the regular National Assembly over plans to change the fiscal paradigm based on the unprecedented tax revenue boom fueled by the semiconductor boom.
According to the fiscal authorities and political circles on the 4th, the Finance and Economy Committee stated in its review report on the revision to the National Finance Act, "According to the revision, the flexibility of the government's financial management will be expanded, while the scope of preliminary deliberation and control over the National Assembly's budget and fund management plan is likely to be relatively reduced."
In this report prepared in the name of expert member Yoo In-gyu, the Finance and Economy Committee pointed out that the revised bill has several special provisions.
A representative example was mentioned of the special case of sending surplus funds from the Future Fund to the general account and not preparing an additional budget (supplementary budget) when tax revenue is insufficient.
According to the current National Finance Act, a supplementary budget must be prepared and the fund management plan must be changed in order to reflect the future fund transfer in the revenue budget in the middle of the fiscal year.
The government emphasized the need for special provisions, citing 'rapid reinforcement of financial resources,' but the Finance and Economy Committee evaluated that "the structure is likely to expand the flexibility of fiscal management while weakening the National Assembly's prior financial control."
The amendment requires that details of changes to the fund management plan for general accounting transfers be submitted to the National Assembly without delay. However, the Finance and Economy Committee drew a line, saying, "This is a procedure for reporting changes that have already been made, which is different from the National Assembly's deliberation and decision on the necessity and scale of transfer in advance," and that ex post control is distinct from ex ante control.
The Finance and Economy Committee also raised questions about applying the same exception as the Financial Fund, which allows the Future Fund to change up to 30% of the main expenditure amount.
The report said that the Future Fund has a different spending structure from the financial fund and predicted that if the related bill is confirmed, the amount that can be changed on its own without going through the National Assembly will be significant.
Questions were also raised about how long the Future Fund's financial resources would last.
In a report on the review of legislation on the establishment and operation of the Future Fund, the Finance and Economy Committee stated, "If the inflow of additional tax revenue is not sufficiently sustained in the future, there is a possibility that the fund's resources will decrease, so it is necessary to review the mid- to long-term financial sustainability of the Future Response Fund."
In particular, there was concern that "if the demand for expenditures for ongoing projects is maintained even after fund resources are reduced, the burden of the project may be transferred to other financial resources such as general accounting, and there is a possibility that the rigidity of mid- to long-term financial management will increase."
The Finance and Economy Committee also pointed out that if the tax revenue estimate is wrong, there may be a gap between the resources reflected in the fund and the actual revenue secured, and there is a possibility that the project will be delayed for a long period of time due to the special case for carryover of the local account assistance project of the Future Response Fund.
There is also a possibility of controversy surrounding the standards for determining projects to be promoted by the Future Response Fund or the division of roles with other funds.
The Future Fund Act aimed to increase the potential growth rate through future-responsive investment, but the Finance and Economy Committee pointed out that it did not provide specific criteria for determining what requirements must be met to qualify as future-responsive investment or the target business.
In addition, he requested that the division of functions be made clear as the Future Fund's projects may overlap with those of other funds.
The report also included an observation that the 'excess tax revenue' stipulated in the Future Fund Act does not correspond to the concept of 'excess tax revenue' in the National Finance Act Amendment, and that the local allocation tax size may be reduced depending on the government's decision due to special provisions that allow excess tax revenue to be transferred to the Future Fund in addition to revenues and expenditures.
In response to the lack of tax revenue, the government stated that even if it sends surplus funds from the future fund to the general account without a supplementary budget, it will not increase total expenditures beyond the original plan.
In a phone call with Yonhap News, an official from the Ministry of Planning and Budget explained, "The concept is that if there is not enough money to spend up to the amount approved by the National Assembly, the future fund will provide that much. If you want to exceed the amount originally approved, a supplementary budget must be prepared."
The government plans to launch the Future Fund within the year by ensuring that related bills are passed at the plenary session of the National Assembly during the regular session of the National Assembly. Pain is expected in the bill review process over whether to focus on fiscal discipline or fiscal operation efficiency.
