[The Editors' Verdict] Controversial Education Grant: Find the Art of Effective Management

Taxes are power. If tax revenue disappears or decreases, the power of the related groups naturally diminishes as well. This is why opposition arises during tax system reforms. The American Civil War was an example of this. One of the backgrounds of the Civil War, which was justified by the abolition of slavery, was the conflicting interests between the North and South regarding tariffs. In April 1816, the United States temporarily implemented a tariff law to reduce the price gap between British imports and American products. The problem came afterward. The southern region, which produced and exported cotton by importing agricultural machinery from Europe, suffered losses, while the northern region, based on manufacturing, gained special benefits. As the tariff expiration approached, the North and South sharply diverged in their positions. The North demanded the expansion and permanent application of the tariff law, but the South fiercely resisted, causing a rejection wave. Since they were already divided over the issue of slavery, it was not easy to bridge the conflict. That’s how the war started.

It is not easy to overhaul an established tax structure. If tax rates were adjusted annually based on collected taxes, the consistency and predictability of the tax system would inevitably decline, leading to stronger tax resistance. In this process, tax resistance can quickly become a political disaster that shakes the regime. Just as the salt tax, which charged ten times the price of salt, became the spark of the French Revolution.

The reason for this lengthy discussion about taxes, which can be the foundation or downfall of vested interests, is the recent controversy over the Local Education Finance Grant (Education Grant). Introduced in 1971, the Education Grant is a budget prepared by unconditionally allocating 20.79% of domestic taxes collected by the central government for use in early childhood, elementary, and secondary education projects. According to the Ministry of Economy and Finance, the Education Grant, which was 14.9 trillion won in 2000, has surged more than fourfold to 65.1 trillion won this year. However, the number of students using this money is decreasing every year. Over the past 22 years, during which the Education Grant increased more than fourfold, the school-age population (ages 6 to 17) has decreased by 2.72 million. It is difficult to fully spend the Education Grant allocated annually. As a result, last year, the total amount of money deposited by education offices nationwide in banks exceeded 6.6 trillion won. This is quite ironic given that the national debt has surpassed 1,000 trillion won.

According to a report by the Korea Development Institute (KDI), if the current Education Grant system is maintained, the grant will increase to 164.5 trillion won by 2060. Unless the Education Grant system is reformed, the unused funds will inevitably balloon like a snowball. There is an urgent need to restructure the system so that budgets can be allocated based on demand. The scope of use, currently limited to early childhood, elementary, and secondary education projects, should also be expanded to include higher education, lifelong education, and support projects for out-of-school youth and young adults.

Of course, during this process, opposition from the education sector and sharply divided public opinion may arise. If the education sector or political circles link the reform of the Education Grant to a “decline in education quality” frame, an unexpected backlash could occur. This is why even some within the ruling party and the opposition suggest it might be better not to address the issue.

Nevertheless, a major overhaul of the current Education Grant system is essential. This is because fiscal resources are not infinite. Limited national resources must be allocated appropriately to increase efficiency. Currently, while budgets for early childhood, elementary, and secondary schools are in surplus, universities, which are pleading financial crisis, are overflowing. The high school seniors of today will become university students or young adults next year who cannot use the Education Grant.

This content was produced with the assistance of AI translation services.