Despite COVID-19... 'This Tax' Collected Far More Than Expected

Review of the 2020 Fiscal Year Total Revenue and Expenditure Closing Results
Impact of Real Estate and Stock Price Increases

[Sejong=Asia Economy Reporter Kim Hyunjung] Last year, securities transaction tax, special rural tax, and capital gains tax were collected at levels exceeding the government's expectations. This was due to the rapid rise in asset prices such as stocks and real estate, which serve as the basis for tax imposition, and the frequent related trading.

According to the Ministry of Economy and Finance on the 12th, a total of 285.5462 trillion won in national taxes was collected last year. This is a 2.7% decrease compared to the previous year's performance (293.45433 trillion won), but 2.1% more than the government's estimate (279.7123 trillion won).

Among the major tax items, the one that exceeded the government's forecast the most was the securities transaction tax. Last year, a total of 8.7587 trillion won was collected from securities transaction tax, which is not only a 95.8% surge compared to the previous year but also 77.5% higher than the government's estimate (4.935 trillion won). The securities transaction tax is imposed based on the transfer price when ownership of stocks or shares is transferred for consideration. The securities transaction tax rate for KOSPI is 0.1%, and for KOSDAQ it is 0.25%, but the government plans to lower these rates to 0.08% and 0.23% respectively this year.

When trading stocks, it is not only the securities transaction tax that must be paid. The special rural tax (0.15%) is also automatically imposed. This tax was established in 1994 to support rural areas from the perspective of regional balanced development following agricultural liberalization. Like the securities transaction tax, the special rural tax also experienced a tax revenue boom last year. The government expected about 4.6711 trillion won to be collected, but the actual special rural tax collected last year was 6.2596 trillion won, 34% more than expected. Compared to the previous year (3.9182 trillion won), this is a 59.8% increase.

Due to the rise in real estate prices, the capital gains tax also grew significantly. Last year, 23.6558 trillion won was collected in capital gains tax, a 46.9% increase compared to the previous year. This amount is 35.9% higher than the government's estimate (17.4041 trillion won). In terms of amount, it is also the tax item that exceeded the forecast the most among all tax categories.

On the other hand, corporate tax based on corporate performance shrank significantly. Last year, corporate tax totaled 55.5132 trillion won, which is 23.1% less than the previous year (72.1743 trillion won). The estimate (58.4753 trillion won) was 5.1% below the actual amount.

Regarding this, Professor Hong Woohyeong of Hansung University’s Department of Economics explained, "Tax revenue directly reflects the impact of COVID-19, and it is difficult to see this year as rosy as well. Although capital gains tax, securities transaction tax, and special rural tax increased due to the rise in real estate and stock prices, this is only temporary."

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