Historic High Error Rate 'Dishonor'... Government to Change Tax Revenue Estimation Method

[Asia Economy Sejong=Reporter Kim Hyewon] The government, which caused the largest-ever tax revenue forecast error of 61 trillion won compared to the original budget, has decided to redesign the forecasting model to improve the accuracy of tax revenue estimates. For economic indicators identified as the cause of the large-scale error, the government will consider forecasts from multiple research institutions instead of relying on a single agency's projections and will expand advisory research institutions to include the private sector. In particular, for highly volatile sectors such as real estate and financial markets, expert consultation will be strengthened.

Along with this, a Tax Review Committee chaired by the Director of the Taxation Office will be introduced, and a four-step decision-making model will be established, proceeding from the Ministry of Economy and Finance's Taxation Office → Ministry of Economy and Finance → collection agencies → external expert verification. Regular reviews will be held once a month from February to July, and ad hoc reviews will be conducted as needed.

Additionally, to timely reflect changes in economic indicators, the tax revenue forecasting cycle will be extended. Specifically, tax revenue will be re-estimated in June, immediately after the comprehensive income tax filing, and in August, immediately after the value-added tax filing. If necessary, re-estimation will also be conducted during the National Assembly review process in November, following the August revenue budget formulation. An early warning system will also be established to respond to abnormal signs such as sudden fluctuations in tax revenue during the first half of the fiscal year due to changes in economic conditions.

The government will also conduct a 'Pass or Fail' performance evaluation to enhance the accuracy of tax revenue forecasts and tax fairness, and take follow-up measures accordingly.

Ko Gwanghyo, Director General of Tax Policy at the Ministry of Economy and Finance, said, "We have explained that the large-scale tax revenue error last year was due to unprecedented economic uncertainty during the COVID-19 recovery period, but we apologize for failing to analyze and recognize this phenomenon in advance," adding, "We will do our best to improve the work system."

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