First Half National Tax Revenue Increased by 48.8 Trillion Won... But Uncertainty Grows in Second Half Due to 'COVID-19 4th Wave'

Monthly Financial Trends August Issue

[Sejong=Asia Economy Reporter Son Seon-hee] The government’s national tax revenue collected in the first half of this year increased by nearly 50 trillion won compared to last year. However, with the full-scale spread of the fourth wave of COVID-19 since last month, tax revenue in the second half of the year is expected to decrease compared to last year. There are concerns that the fiscal balance, which showed a slight improvement, may worsen again in the second half.

According to the "Monthly Fiscal Trends August Issue" announced by the Ministry of Economy and Finance on the 10th, national tax revenue from January to June totaled 181.7 trillion won (cumulative basis), an increase of 48.8 trillion won compared to the first half of last year. Capital gains tax (7.3 trillion won) and securities transaction tax (2.2 trillion won) continued to rise due to the boom in asset markets such as real estate and stocks.

However, on a monthly basis, the total national tax revenue increased by only 5.2 trillion won compared to last year, which is less than half the increase of 10.8 trillion won in May. The actual increase in tax revenue has been slowing down every month since April. Income tax, which accounts for the largest portion of national tax revenue, increased by 7.2 trillion won in May (year-on-year), but the increase narrowed to 4.4 trillion won in June. Corporate tax, which increased by 3.6 trillion won in May, decreased by 1.4 trillion won in June. Choi Young-jeon, head of the Tax Analysis Division at the Ministry of Economy and Finance, said, "We are closely monitoring uncertainties caused by the resurgence of COVID-19."

Although tax revenue increased significantly in the first half of this year, the government stated that it will maintain the annual tax revenue forecast of 314.3 trillion won. The excess tax revenue is also expected to converge to 31.5 trillion won annually, which means that unlike the first half, tax revenue in the second half is expected to decrease by 17.3 trillion won compared to last year.

As tax revenue increased, the fiscal balance improved somewhat. As of the end of June, the integrated fiscal balance recorded a deficit of 47.2 trillion won, reducing the deficit by 42.8 trillion won compared to the first half of last year. The managed fiscal balance, which excludes social security fund balances such as the National Pension to show the actual state of the country’s finances, recorded a deficit of 79.7 trillion won. This is an improvement compared to the first half of last year when the managed fiscal balance deficit reached the 110 trillion won level due to the full-scale spread of COVID-19, but it still has not recovered fiscal soundness to the pre-COVID-19 level.

Central government debt was recorded at 898.1 trillion won. The government repaid about 2 trillion won in government bonds while preparing the second supplementary budget last month, reducing the debt by 1.7 trillion won compared to the previous month.

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