"National Tax Service's Incorrectly Paid Earned Income and Child Tax Credits Total 27 Billion Won Over 5 Years"

Analysis of National Tax Service Data by Song Eon-seok, People Power Party Lawmaker
Amount Decided for Recovery in 2021 Increased 3.2 Times Compared to 2019

Kim Chang-ki, Commissioner of the National Tax Service, attended the full meeting of the Planning and Finance Committee held at the National Assembly on the 15th and reported on the settlement of accounts for the 2021 fiscal year under the Ministry of Economy and Finance. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Hyunju Lee] Over the past five years, the amount of Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) that the government mistakenly paid to citizens and needs to recover has reached 27 billion KRW.

According to data submitted by the National Tax Service (NTS) to Song Eon-seok, a member of the National Assembly's Planning and Finance Committee from the People Power Party, the NTS's decision amount for recovering EITC and CTC over the past five years totaled 27 billion KRW. In particular, the recovery decision amount, which was 2.78 billion KRW in 2019, surged 3.2 times to 8.9 billion KRW in 2021.

The Earned Income Tax Credit system is a work-linked income support program where the government provides incentives calculated based on income to low-income workers or business households. It was first introduced in 2009 and has expanded its payment criteria and eligibility annually. Since 2019, the age requirement for single households, which was 30 years or older, has been abolished, and income requirements have been relaxed. A semi-annual payment system has been implemented, allowing applications and payments every six months. The Child Tax Credit has been paid since 2015 to alleviate the burden of child-rearing.

The problem is that as the system expands, the amount to be recovered after incentive payments is also increasing every year. The NTS stated that it pays incentives based on eligibility at the time of the applicant's submission, but if the applicant's assets exceed the initially assessed amount or if there are income changes causing them to no longer meet payment requirements, recovery is conducted through post-management.

The recovery execution rate has been declining every year. According to data submitted to Representative Song, the collection rate for the recovery decision amount of EITC and CTC was about 85.2% in 2017 based on the total recovery target amount, but it dropped to 84.7% in 2018, 83.1% in 2019, 70.6% in 2020, and as of the most recent tally at the end of February this year, it was confirmed to be around 47.3% in 2021.

The number of appeals related to EITC and CTC also increased 2.4 times, from 28 cases in 2017 to 67 cases in 2021.

Representative Song said, "The Earned Income Tax Credit and Child Tax Credit system, a work-linked income support program, is an essential system for the people, but problems such as incorrect payments or improper recoveries continue to appear," adding, "Since this system involves precious public funds, thorough measures must be taken to prevent mismanagement of incentives or waste of administrative resources."

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