Ministry of Planning and Budget Minister Park Hong-geun, addressing recent controversy over Gyeonggi Province Governor Choo Mi-ae's remarks about fire services being a "fiscal straw," stated, "I share the view that this issue raises the need to examine the fire service budget more closely," hinting at the possibility of an increase during the National Assembly deliberation stage.
On the 21st, Park Hong-geun met with accredited reporters at the Government Sejong Complex and said, "If necessary, we will comprehensively consider factors such as the impact on the individual consumption tax, local governments' fiscal capacity, and the adequacy of central government support, and review which areas should be supported during the National Assembly deliberation stage."
In April 2020, as part of the transition of fire service personnel to national civil servants, the government increased the number of fire service personnel by 20,000 and raised the fire safety transfer tax rate from 20% to 45% of the individual consumption tax to support personnel costs.
The transition of the fire service to a national position was decided during the Moon Jae-in administration with the aim of providing identical fire services in all regions and strengthening the state's responsibility for disaster response. However, because fire services are still classified as local affairs, central government support has been limited. Moreover, as tobacco consumption declines, the fire safety transfer tax has also decreased, and the burden on local governments continues to grow.
Park Hong-geun stated, "The budget related to fire services is approximately 9 trillion won, of which 400 billion won is allocated to the National Fire Agency, and the rest goes to local governments," adding, "Of the 8.6 trillion won, the state supports 10.2%, while local governments share the remainder."
He explained, "As part of an agreement between society and the National Assembly in 2020 regarding the transition to national civil servants, personnel numbers needed to be increased, so it was agreed that 'the individual consumption tax on tobacco would be raised to 45% to cover costs, while the government would bear additional responsibilities such as helicopters or other tasks that individual local governments find difficult to handle.'"
He added, "Recently, public interest in fire service budgets has grown due to the sacrifices of firefighters," stating, "It is clearly the state's duty to create an environment where those who have sacrificed and devoted themselves for the nation and its citizens can work more safely."
Regarding the operational direction of the Future Response Fund, Park Hong-geun said, "The purpose is not to create new national wealth." He explained that since the goal is not wealth creation, the fund's return rate will be maintained at a level comparable to minimum government bond yields, with strategic investments made when necessary.
He stated, "It serves as a fiscal dam for future strategic investments, literally speaking, and does not place emphasis on returns themselves," adding, "How government bond yields develop in the future will also affect the (Future Response Fund's) return rate. Since it is naturally the precious tax money of the people, both profitability and stability must be guaranteed."
He emphasized, "We need to secure a higher return rate than the interest on government bond issuance to establish a basis for managing surplus funds," noting, "There remains the task of designing the fund by comprehensively considering factors such as whether a separate management company would be better. We will proceed with the detailed design of the Future Response Fund after comprehensive consideration."
Regarding the reduction in additional government bond issuance volume, he said, "We are monitoring market conditions," adding, "For example, when we announced last time that we would reduce the issuance volume of 3-year (government bonds) to 5 trillion won, did the price not fall? It is a matter to be decided after comprehensive review. Nothing has been finalized yet; we will decide based on monitoring results."
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