August tax revenue sharply declines despite 0.6 trillion KRW increase... Government states "Real estate and stock transactions slow down, reflected in future tax revenue"

Ministry of Economy and Finance Publishes October Issue of Monthly Fiscal Trends and Issues

[Sejong=Asia Economy Reporter Kim Hyun-jung] As the base effect of the government's tax support disappears, the increase in national tax revenue in August fell to the smallest margin this year. The government forecasted that the recent slowdown in asset transactions such as real estate and stocks will be reflected in future tax revenues with a time lag.

According to the October issue of the "Monthly Fiscal Trends and Issues" published by the Ministry of Economy and Finance on the 12th, the cumulative tax revenue up to August was 397.5 trillion won, an increase of 79.7 trillion won compared to the previous year. Among this, national tax revenue was 248.2 trillion won, which was 55.7 trillion won more than the previous year. Excluding the base effect of 7.7 trillion won caused by last year's tax support, national tax revenue from January to August this year increased by 48 trillion won.

However, looking at it monthly, the increase in tax revenue compared to the previous year fell to the lowest level this year. The monthly tax revenue increase was 2.4 trillion won in January, 8.7 trillion won in February, 7.9 trillion won in March, 13.8 trillion won in April, 10.8 trillion won in May, 5.2 trillion won in June, and 6.3 trillion won in July, but in August it dropped to 600 billion won, about 10% compared to the previous month.

This is due to the disappearance of the base effect of tax support and a slight slowdown in the increase of asset-related tax revenue. Looking at cumulative tax revenue by category, corporate tax collected in August alone was 13.2 trillion won (54.9 trillion won from January to August), an increase of 2.2 trillion won compared to the previous year due to economic recovery, but income tax collected was 7.8 trillion won (79.6 trillion won from January to August), a decrease of 1.6 trillion won compared to the previous year. The Ministry of Economy and Finance explained that real estate capital gains tax increased by about 500 billion won and stock capital gains tax by about 700 billion won compared to last year.

Non-tax revenue (19.5 trillion won) from January to August this year increased its progress rate by 1.1 percentage points compared to the same period last year. This was influenced by an increase in current transfer income (200 billion won), including a 100 billion won increase in energy special account charges due to increased crude oil imports from expanded factory operation rates.

Regarding future tax revenue conditions, uncertainties remain. Park Cheol-geon, Director of Fiscal Soundness at the Ministry of Economy and Finance, diagnosed, "Uncertainties in tax revenue remain due to asset market stabilization and strengthened social distancing measures caused by the resurgence of COVID-19." Choi Young-jeon, Head of Tax Analysis at the Ministry of Economy and Finance, said, "The increase in real estate and stock transaction flows is showing a significant slowdown," and added, "This will eventually be reflected in tax revenue with a time lag." He further stated, "Tax revenue increases due to economic recovery are expected to continue, but overall asset tax revenue is mixed with positive and negative factors, so we need to monitor the trends."

Meanwhile, although the increase margin has decreased, steady revenue growth has continued to improve the fiscal deficit. As of the end of August, the integrated fiscal balance recorded a deficit of 29.8 trillion won, a reduction of 41.1 trillion won compared to the same period last year. The managed fiscal balance excluding social security fund balance (40.4 trillion won) also recorded a deficit of 70.2 trillion won, improving by 25.8 trillion won compared to last year. National debt stood at 927.2 trillion won.

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