Tax Revenue Increased by 50 Trillion Won... But National Budget Faces 98 Trillion Won Deficit

National Tax Revenue 373.6 Trillion Won... Up 50.2 Trillion Won YoY
National Debt 1,045.5 Trillion Won... Up 7.3 Trillion Won MoM

[Asia Economy Sejong=Reporter Lee Jun-hyung] As of last year through November, tax revenue was found to have increased by more than 50 trillion won compared to the previous year. However, with a significant rise in government spending, the national budget deficit reached 98 trillion won. National debt increased by more than 7 trillion won in just one month, surpassing the second supplementary budget (supplementary budget) forecast of last year to reach 1,045.5 trillion won.

According to the "Monthly Fiscal Trend January 2023" released by the Ministry of Economy and Finance on the 12th, national tax revenue from January to November last year was 373.6 trillion won, an increase of 50.2 trillion won compared to the same period the previous year. This was thanks to income tax and corporate tax collecting 15 trillion won and 32.6 trillion won more, respectively. Value-added tax also increased by 7.8 trillion won due to consumption and import growth. The progress rate of national tax revenue compared to the government budget was 94.2%, up 4.5 percentage points from the previous month (89.7%).

National Budget Deficit Nears 100 Trillion Won

Although more than 50 trillion won in taxes were collected, the national budget deficit approached 100 trillion won. From January to November last year, the integrated fiscal balance (total revenue - total expenditure) recorded a deficit of 50.8 trillion won. This was because the government's total expenditure (622.5 trillion won) greatly exceeded total revenue (571.6 trillion won). The management fiscal balance recorded a deficit of 98 trillion won, an increase of 21 trillion won compared to one year earlier. The management fiscal balance excludes the four major social security funds such as the National Pension from the integrated fiscal balance and shows the government's actual fiscal situation.

At the time of the second supplementary budget last year, the government projected that the management fiscal balance deficit for last year would reach 110.8 trillion won. If the management fiscal balance records a deficit again this year, it will be the 15th consecutive year of deficit since 2008. In particular, the deficit size greatly expanded from 2020 when COVID-19 spread. The management fiscal balance deficit increased from 54.4 trillion won in 2019 to 112 trillion won in 2020 and recorded 90.6 trillion won in 2021.

National debt is also increasing rapidly. As of the end of November last year, national debt stood at 1,045.5 trillion won, up 7.3 trillion won from the previous month. This exceeded the government's forecast of 1,037.7 trillion won for the end of last year presented in the second supplementary budget. A Ministry of Economy and Finance official said, "The central government debt balance in November exceeded the second supplementary budget forecast," adding, "(However) considering the year-end treasury bond repayment schedule, it is expected to converge to the originally planned level."

Aftermath of Moon Jae-in's 'Expansionary Fiscal Policy'

The tightening of the national budget is largely due to the expansionary fiscal policy stance of the Moon Jae-in administration. In fact, national debt increased by 310.5 trillion won over five years, from 660.2 trillion won in 2017 when the previous government took office to 970.7 trillion won in 2021. Last year, national debt surpassed 1,000 trillion won for the first time in history, and it is expected to exceed 1,100 trillion won this year.

Given this situation, there are calls to accelerate the legislation of fiscal rules. Fiscal rules are institutional frameworks that limit national debt from exceeding a certain level. The current government, which emphasizes a sound fiscal stance, pushed for the introduction of fiscal rules last year but ultimately failed to pass the National Assembly.

In this regard, the Ministry of Economy and Finance intends to legislate fiscal rules as soon as possible, aiming for passage in the next extraordinary session of the National Assembly as early as next month. The fiscal rules prepared by the Yoon Seok-yeol administration aim to keep the management fiscal balance deficit ratio below 3% of GDP, and if the national debt ratio exceeds 60%, reduce the deficit ratio to 2%. Professor Yang Jun-mo of Yonsei University's Department of Economics said, "The current fiscal situation is already the last line for introducing fiscal rules," adding, "Maintaining government spending as soundly as possible can actually help economic recovery."

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