South Korean President calls for excess tax revenue from semiconductor boom to be used for long-term investments to boost growth
Seoul, June 8
The President of South Korea Lee Jae Myung on Monday said excess tax revenue from the semiconductor boom should be used for long-term investments to boost growth, while taking a cautious stance on calls for companies to share excess profits with workers, according to a news report by The Korea Herald.
During a press conference marking the first anniversary of his inauguration at Cheong Wa Dae in Seoul, Lee said that excess tax revenue could fluctuate depending on economic conditions and should therefore be used for future generations and to strengthen the country's growth potential.
"It should be invested in a direction that raises South Korea's growth potential," the news report quoted Lee. "That means discovering new growth engines like semiconductors."
He added that the government could make large investments in areas that the private sector cannot pursue on its own but that are necessary for the country's future. Meanwhile, the President also addressed the issue of distributing a certain percentage of corporate operating profits as performance-based bonuses, calling it "highly controversial."
He said recent labor-management tensions over chipmaker Samsung Electronics' profit-based bonus system had been resolved, but the dispute had raised a new question for Korean society.
"There is the contribution of workers, the share of investors, the role of the state that invested heavily in research and development, and the contribution of the public that supported tax cuts during difficult times," Lee said. "I thought a lot about whether this should be subject to labor disputes or whether it falls under management rights, but I have not reached a conclusion."
Lee warned that moving too quickly on such a system could hurt corporate investment.
"If we do it first, companies could all leave," Lee said, referring to discussions on basic income in places such as Silicon Valley. "Major foreign companies could also become reluctant to invest in Korea."
He said corporate taxes are relatively predictable, but requiring companies to distribute a certain percentage of operating profits could create uncertainty.
"It is a debate that could have a very serious impact on national industrial policy," Lee noted. "The debate itself must be handled very carefully."
Lee added that the issue should not be discussed only within Korea, as it could affect the global trade order.
"It may require discussion at the international level," he said.
— ANI
Reader Comments
I find his cautious stance on profit-sharing very interesting. He's spot on about the complexity—if we mandatorily link bonuses to profits, companies might just shift R&D or investment abroad. But at the same time, workers deserve a fair share of the boom. It's a tightrope walk. Hope our policymakers in India take note of this nuanced debate.
Lee's approach reminds me of how Singapore manages its reserves and sovereign wealth funds. Using excess revenue for future generations is smart statecraft. But on the worker bonus issue—in India, we have the bonus and profit-sharing acts, but implementation is often messy. Korea is right to think carefully before rushing.
Couldn't agree more with his point about the state's role. India has also invested heavily in R&D through ISRO, DRDO and the like. The 'contribution of the public that supported tax cuts during difficult times' is a powerful reminder that economic growth isn't just about companies and workers—it's a societal contract. 👍
As a Western observer, I find this debate refreshingly pragmatic. In the US, we tend to swing between extreme pro-business or pro-labor rhetoric. Lee's middle path—let's invest the windfall wisely, but not mandate profit-sharing overnight—seems wise. The global competition for semiconductor investment is real; any misstep could push companies to relocate.
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