Non-Tax Revenue Undercollected for 7 Consecutive Years

Yejungcheo, '2019 Fiscal Year Settlement Analysis Summary'

Employment and Industrial Accident Insurance Premiums, Fines, and Forfeitures Collected 36.9 Trillion Won Less Than Expected
High Possibility of Under-Collection Again This Year

,

[Sejong=Asia Economy Reporter Joo Sang-don] Employment and industrial accident insurance premiums, fines, and forfeitures?categorized as 'non-tax revenue'?have been collected less than expected for seven consecutive years up to last year. The cumulative under-collection during this period amounts to 36.9 trillion won. This trend continues this year, making it highly likely that non-tax revenue will be under-collected for the eighth consecutive year.

According to the '2019 Fiscal Year Settlement Analysis Report' published by the National Assembly Budget Office on the 14th, non-tax revenue in 2019 was 179.3 trillion won, an increase of 8.1 trillion won (4.7%) compared to 171.2 trillion won the previous year. However, it fell short by 2.3 trillion won (-1.3%) compared to the supplementary budget (181.6 trillion won). This means that more than 2 trillion won less revenue was collected than the government's estimate.

Last year, this major revenue source accounted for 37.4% of total revenue (473.1 trillion won), including national taxes. Non-tax revenue, which refers to all revenue excluding national tax income, includes social security contributions such as national and private school pensions, employment and industrial accident insurance, as well as fines and forfeitures, and government investment income.

Looking at the settlement compared to the budget (based on supplementary budget) for non-tax revenue, there was an over-collection of 3.9 trillion won in 2011, but under-collection has continued since 2013 (-500 billion won). The figures recorded are ▲2015: -8 trillion won ▲2016: -9 trillion won ▲2017: -6.8 trillion won ▲2018: -8.4 trillion won. The cumulative non-tax revenue for the first half of this year is 13.1 trillion won, which is only 45.2% of the 29.1 trillion won reflected in the second supplementary budget. This indicates a high possibility of under-collection again this year.

The main reason for the continued under-collection of non-tax revenue is that social security contributions, which account for the largest share of revenue, were collected less than expected. Social security contributions have fallen short of plans for three consecutive years. Except for the national pension in 2019 and industrial accident insurance in 2018, most insurance premiums have been under-collected every year. Last year, the planned amount for social security contributions was 69.7472 trillion won, but the actual amount was 69.5504 trillion won, falling short by 196.9 billion won. The Budget Office analyzed the main cause as "the number of subscribers or the standard monthly income amount being lower than originally planned."

Fines, forfeitures, and penalties were also under-collected. In 2017, there was an over-collection of 552.2 billion won, which led to an increase in the 2018 planned amount by 3.6393 trillion won, 315.9 billion won more than the previous year, resulting in under-collection in 2018 (-764.5 billion won) and 2019 (-604.3 billion won).

An official from the Budget Office stated, "The continued under-collection phenomenon can undermine confidence in the total fiscal volume during budget formulation. Especially when the under-collection of non-tax revenue occurs simultaneously with a shortfall in national tax revenue (1.3 trillion won) as in the 2019 fiscal year, it can hinder the execution of expenditure projects and weaken national finances, so improvement is necessary."

Accordingly, the Budget Office proposed improvement measures to enhance the accuracy of budget formulation and mitigate under-collection, including ▲systematic research and model construction for forecasting techniques of non-tax revenue ▲establishment of a systematic collection system for non-tax revenue ▲legal revisions for integrated management of non-tax revenue. The official emphasized, "Since the Ministry of Strategy and Finance announced in 2016 the formation of bodies such as the National Bond Management Committee to manage non-tax revenue systematically and consistently, there has been little progress. It is necessary to start discussions on improving the collection and management system of non-tax revenue."

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