February Tax Revenue Increased by 8.7 Trillion Won Driven by Real Estate and Stocks... Fiscal Deficit at 36.5 Trillion Won (Update)

Income Tax, Corporate Tax, and VAT Increase
Integrated Fiscal Balance Turns to Deficit After One Month

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Due to rising housing prices and a booming stock market, national tax revenue in February this year increased by more than 8 trillion won compared to the same month last year. However, expenditures related to the spread of COVID-19 also rose, resulting in deficits in both the integrated fiscal balance and the management fiscal balance, which are the government's household accounts. Although the deficit narrowed, it is expected that the deficit will inevitably widen in the future due to expansionary fiscal policies amid the prolonged COVID-19 pandemic.

According to the 'Monthly Fiscal Trends April Issue' released by the Ministry of Economy and Finance on the 7th, national tax revenue in February reached 19 trillion won, an increase of 8.7 trillion won compared to one year ago. Income tax increased by 2.4 trillion won due to increased housing transactions, and other national taxes, including comprehensive real estate tax and securities transaction tax, also rose by 1.2 trillion won.

Corporate tax revenue increased by 500 billion won due to base effects and other factors. Value-added tax revenue rose by 3.5 trillion won as the payment deferral period ended following the National Tax Service's VAT filing extension. Additionally, transportation tax increased by 500 billion won, and customs duties remained at the same level as the previous year at 600 billion won.

Besides national taxes, non-tax revenue (1.4 trillion won) and fund revenue (6.9 trillion won) also increased, bringing total government revenue to 97.1 trillion won, up 19.4 trillion won from the previous year. The tax collection progress rate, which indicates the ratio of actual tax collected to the tax expected to be collected over the year, rose by 3.7 percentage points to 20.4% compared to 16.7% in the same period last year.

The integrated fiscal balance, which is total revenue minus total expenditure, showed a deficit of 16.1 trillion won. Although the deficit narrowed compared to the same month last year (26.6%), it shifted from a surplus of 3.4 trillion won in the previous month to a deficit. This was due to an increase in total expenditure by 2.9 trillion won compared to the previous year, driven by increased contingency fund spending for COVID-19 response.

The management fiscal balance, which reflects the government's actual household finances, recorded a deficit of 20.4 trillion won. This deficit also narrowed compared to the same month last year (29.3%).

Regarding this, a Ministry of Economy and Finance official explained, "February is usually a month when the three major taxes?income tax, corporate tax, and VAT?do not come in," adding, "Since there is no revenue but expenditures continue steadily through early disbursements, the integrated fiscal balance shifted to a deficit."

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