[Weekly Review] January National Tax Approaches 50 Trillion Won... Large Corporations Officially Enter Used Car Market

It has been revealed that national tax revenue collected in January alone nearly reached 50 trillion won. This marks an increase of more than 10 trillion won compared to the previous year, which is analyzed as a base effect resulting from the government's adjustment of various tax payment deadlines for small business owners and others affected by the COVID-19 pandemic.

According to the 'March Fiscal Trend' report released by the Ministry of Economy and Finance on the 17th, national tax revenue in January amounted to 49.7 trillion won, an increase of 10.8 trillion won compared to the same month last year. The progress rate against the revenue budget was 14.5%, the highest January progress rate in the past five years since the Moon Jae-in administration took office.

January National Tax Nears 50 Trillion Won... "Impact of COVID-19 Base Effect"

The item with the largest fluctuation due to tax support effects was value-added tax (VAT). In January alone, a total of 24.4 trillion won was collected, reaching a progress rate of 31.5%. The government postponed the VAT payment of 3.2 trillion won, which should have been collected in January last year from 6.65 million individual business owners facing difficulties due to COVID-19, to February, causing a base effect. Additionally, the payment deadline for the second half of last year's VAT (2.3 trillion won) was deferred (from October 2021 to January 2022), resulting in relatively higher collections this year. However, this is a temporary factor, and its impact is expected to be offset in the February fiscal trend report.

Along with VAT, income tax and corporate tax, which constitute the three main pillars of national tax revenue, were also collected relatively more compared to last year. Employment recovery, with the number of employed persons increasing by more than 1.13 million in January, led to a 1.5 trillion won increase in earned income tax.

Regarding corporate tax, similar to VAT, the government extended the corporate tax interim payment deadline by three months (from August to November 2021) for small and medium-sized enterprises struggling due to COVID-19. As a result, corporate tax collected in January, paid in two installments within two months, was recorded at 1.2 trillion won. Considering that corporate tax revenue increased by 900 billion won in January, excluding deferred tax revenue, actual corporate tax decreased compared to January last year.

A Ministry of Economy and Finance official explained, "Excluding tax deferrals due to tax support, the increase in tax revenue from economic recovery is 3.2 trillion won," adding, "Since the January progress rate accounts for a relatively small portion of the total tax revenue, it needs to be monitored further."

Used Car Sales Industry Not Designated as Livelihood-Suitable Sector... Formalizes Large Corporations' Entry

Large corporations such as Hyundai Motor and Kia are now able to enter the used car market. The government concluded 'not designated' in the review of the used car sales industry as a livelihood-suitable sector, although it attached a 'conditional' recommendation for win-win cooperation.

According to related ministries on the 17th, the Ministry of SMEs and Startups decided not to designate the used car sales industry as a livelihood-suitable sector after long discussions at a closed-door review committee meeting held from 10 a.m. that day. This comes more than three years after the used car industry applied for re-designation to block large corporations' market entry in February 2019.

The used car sales industry was designated as a livelihood-suitable sector restricting large corporations' entry in 2013. When the protection period expired in February 2019, the used car industry requested re-designation from the Ministry of SMEs and Startups the same year. Initially, the ministry planned to conclude by May 2020 but postponed the decision considering the policy direction of the next government. After about two years, a review committee was held in January this year but again failed to reach a conclusion.

Meanwhile, the finished car industry completed preparations for market entry. Hyundai Motor officially announced its entry into the used car market by presenting a concrete business plan. Kia has applied for registration of a used car business in Jeongeup, Jeollabuk-do. Korean GM, Renault Samsung, and SsangYong, the three mid-sized companies, are also reportedly preparing internally for entry into the used car market.

Yoon Suk-yeol Government's 'Trade' Affairs... Tensions Between Ministry of Trade and Ministry of Foreign Affairs

In the upcoming Yoon Suk-yeol administration, tensions are intensifying between the Ministry of Foreign Affairs, which aims to regain trade authority after nine years, and the Ministry of Trade, Industry and Energy over 'trade' affairs.

Domestically, the 'trade function' has mainly been handled by the Ministry of Trade, Industry and Energy since 1948 but was transferred to the Ministry of Foreign Affairs during the Kim Dae-jung administration in 1998, then moved back to the Ministry of Trade, Industry and Energy in 2013.According to related ministries on the 18th, an analysis of government organizational structures of the Group of Twenty (G20) and Organisation for Economic Co-operation and Development (OECD) member countries revealed that among the top 10 countries with the highest manufacturing share relative to GDP, nine have their trade functions under the industrial ministry.

Trade experts point out, "South Korea has an economic structure that relies on trade, where companies manufacture goods and sell them overseas," adding, "To reflect corporate voices in trade policy, it is desirable for the current government organizational system to encompass both industrial and trade policies within one ministry."

In response, the Ministry of Foreign Affairs argues for the transfer of trade functions to itself based on the 'economic security' rationale. They claim that due to global supply chain instability, alliances between countries are expanding from a traditional 'security' basis to an 'economic + security' basis.

Minister Moon Seung-wook Orders "Speedy Completion of Four Nuclear Reactors"

On the 18th, Moon Seung-wook, Minister of Trade, Industry and Energy, visited the Korea Hydro & Nuclear Power Hanul Nuclear Power Plant Headquarters and ordered, "Please complete the four nuclear reactors currently under construction promptly while meeting the enhanced safety standards." Some interpret this visit as signaling a partial shift in future nuclear power policy, emphasizing the importance of nuclear power for stable electricity supply.

According to the Ministry of Trade, Industry and Energy, Minister Moon visited the Korea Hydro & Nuclear Power Hanul Nuclear Power Plant Headquarters in Uljin County, Gyeongsangbuk-do, and the Korea Gas Corporation Samcheok Liquefied Natural Gas (LNG) base in Samcheok, Gangwon-do, sequentially on the same day.

The Hanul headquarters operates six reactors (Hanul Units 1 to 6) and is constructing two new reactors (Shin Hanul Units 1 and 2). These reactors account for about 30% of domestic nuclear power generation. The Samcheok LNG base is a key energy infrastructure that stabilizes natural gas supply to the Gangwon and Yeongnam regions by constructing and operating the world's first and largest 270,000 kiloliter LNG storage tank.

Minister Moon Seung-wook of the Ministry of Trade, Industry and Energy visited the Samcheok LNG Base of Korea Gas Corporation in Samcheok-si, Gangwon-do on the morning of the 18th and toured the main facilities.

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