[Exclusive] Fiscal Soundness in the Red... Last Year's Uncollected Non-Tax Revenue Approaches 9.7 Trillion Won

Data from Park Hong-geun, member of the National Assembly's Strategy and Finance Committee, Democratic Party
Delinquent debt collection entrusted to KAMCO but recovery rate remains in the 1% range
Non-tax revenue accounts for a significant portion of the national budget's total income
"Active measures for recovery must be pursued"

[Sejong=Asia Economy Reporter Kim Hyunjung] It has been revealed that approximately 9.7 trillion won was undercollected last year due to the improper collection of non-tax revenue, which accounts for more than 40% of the total national budget revenue. As the government has embarked on expansionary fiscal policies to respond to the COVID-19 pandemic, warning signs have been raised regarding fiscal soundness, and there are calls to actively devise recovery measures for delinquent bonds.

According to data received by Park Hong-geun, a member of the National Assembly's Planning and Finance Committee from the Ministry of Strategy and Finance on the 8th, the outstanding amount of non-tax revenue as of last year was recorded at 9.6582 trillion won. Non-tax revenue includes social security contributions such as employment and industrial accident insurance premiums, fines, confiscations, penalties, and government investment income. The scale of outstanding amounts has increased annually: 7.945 trillion won in 2015, 8.3552 trillion won in 2016, 8.946 trillion won in 2017, and 9.3982 trillion won in 2018, accumulating to a total of 44.3026 trillion won over the past five years.

Non-tax revenue accounts for a significant portion of the total revenue in the national budget. Based on the 2021 budget, out of the total revenue (483 trillion won), national taxes amounted to 282.8 trillion won, or 58.6%, while non-tax revenue was 200.2 trillion won, or 41.4%. If non-tax revenue is not properly collected, it can cause disruptions in the execution of expenditure projects or weaken national finances, similar to tax revenue shortfalls, highlighting the need for special management.

[Image source=Yonhap News]

In particular, with the recent expansion of national fiscal projects due to the COVID-19 pandemic, the scale of annual expenditure projects has been increasing. The total expenditure initially projected at 500.9 trillion won at the beginning of the Moon Jae-in administration has increased by nearly 55 trillion won to 555.8 trillion won due to additional COVID-19 related response projects.

On the other hand, the recovery of overdue non-tax revenue claims has been slow. According to the National Bond Management Act, since 2014, the government has entrusted the Korea Asset Management Corporation (KAMCO) with the collection of non-tax revenue arrears exceeding 100 million won or delinquent bonds, paying a commission annually. However, the recovery rate over the past five years has been only 1.8%. According to data submitted by KAMCO, from 2015 to June of this year, it handled 559.6 billion won worth of related overdue claims but recovered only 10.1 billion won. The commission for national bond and penalty recovery work during the same period amounted to 765 million won.

The total amount of overdue claims stood at 11.6713 trillion won as of the end of last year. By ministry, the amounts are as follows: National Tax Service 4.1587 trillion won, Ministry of Employment and Labor 3.9359 trillion won, Ministry of Environment 847.1 billion won, and Ministry of Land, Infrastructure and Transport 702.5 billion won.

Regarding this, Assemblyman Park Hong-geun stated, "Although the government announced in 2017 that it would disclose the list of long-term and high-amount defaulters and establish a recovery system including restrictions on licensed businesses after conducting an in-depth evaluation of non-tax revenue in 2016, there has been no progress," emphasizing, "Active measures must be taken to prevent holes in the fiscal budget."

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