SEOUL– South Korea’s tax revenue rebounded in November last year from a year ago as corporate income tax increased amid the economic recovery, the finance ministry said Thursday.
The government collected 16 trillion won (US$13.5 billion) in taxes in November, compared with 14 trillion won a year earlier, according to the Ministry of Economy and Finance.
Tax revenue rebounded in the month after a fall of 6.2 trillion won in October when the government delayed the payment of some taxes by small merchants and firms hit by the pandemic.
The ministry said tax revenue has increased as income from the collection from corporate taxes and value-added taxes rose in line with the economic recovery.
Capital gains taxes increased amid rises in asset prices, and revenue from income taxes also rose as the number of employed people soared due to a recovery in the job market.
In the first 11 months of last year, tax revenue rose 55.6 trillion won on-year to 323.4 trillion won.
The accumulated tax revenue is higher than the government’s previous estimate of 314.3 trillion won for all of 2021. This means excess tax revenue came to 9.1 trillion won in the January-November period.
The ministry said tax revenue of December probably rose more than 17.7 trillion won on-year, indicating that the yearly excess tax revenue could reach at least 26.8 trillion won.
“As the economic recovery gained momentum amid robust exports and rises in asset prices last year, the amount of excess tax revenue could top the government’s earlier forecast (of 19 trillion won),” a ministry official said.
Given an estimated addition of some 8 trillion won in excess tax revenue, the government is expected to be under pressure to draw up another round of an extra budget to support pandemic-hit merchants.
Lee Jae-myung, the presidential candidate of the ruling Democratic Party, called for the need to draw up an extra budget of at least 25 trillion won to support affected merchants.
Finance Minister Hong Nam-ki previously opposed the creation of another extra budget early in the new year. But he recently left open the possibility that the government may review it by taking into account virus situations.
South Korea drew up two rounds of supplementary budgets totaling some 50 trillion won last year to provide tailored support to small merchants and cash handouts to people in the bottom 88 percent income bracket.
This year’s national budget stands at a record 607.7 trillion won.
In the January-November period, the government’s total income, including tax revenue, came to 523.9 trillion won, up 86.1 trillion won from the previous year.
The country’s gross expenditures grew 45.2 trillion won on-year to 546.3 trillion won as the government ramped up spending to cope with the fallout of the pandemic.
As a result, the country posted a fiscal deficit of 22.4 trillion won in the 11-month period, smaller than a shortfall of 63.3 trillion won the previous year.
The managed fiscal balance, another key gauge of fiscal soundness calculated on a stricter term, logged a deficit of 77 trillion won in the first 11 months. It is calculated after excluding the balance of social safety funds.
The ministry said if the trends continue, the government’s fiscal deficit for 2021 is expected to be smaller than its earlier projection of 90.3 trillion won.
The central government debt tentatively amounted to 939.1 trillion won as of end-December, up from 819.2 trillion won at the end of 2020.
The government earlier said the 2021 national debt is expected to reach 965.3 trillion won, an amount equivalent to 47.3 percent of the gross domestic product.
The national debt is expected to reach 1,064.4 trillion won this year, marking the first time that it would exceed the 1,000 trillion-won mark, according to the ministry’s estimate.
Source: Yonhap News Agency