January National Tax Revenue Falls Short by 6.8 Trillion Won... Collection Rate at 10.7%, Lowest in 18 Years

Economic Slowdown and Tax Revenue Deferral Overlap Negative Base Effect
Ministry of Economy and Finance "Achieving 400 Trillion Won This Year May Be Difficult"

Last month, national tax revenue was nearly 7 trillion won less than the same period last year. The Ministry of Economy and Finance attributed this to a combination of poor economic conditions since the fourth quarter of last year and a base effect caused by deferred tax revenue due to tax support measures.

On the 28th, the Ministry of Economy and Finance announced that January's national tax revenue was 42.9 trillion won, a decrease of 6.8 trillion won compared to the same month last year.

The ministry explained that considering the base effect from the decrease in deferred tax revenue due to tax support (-5.3 trillion won), the actual tax revenue decline was about 1.5 trillion won. This fluctuation in tax revenue in January 2022 and 2023 was due to deferred tax revenue from tax support measures in the second half of 2021 and 2022.

With less tax collected, the progress rate (collection rate against the tax revenue target) was 10.7%, marking the lowest level in 18 years since January 2005 (10.5%). A ministry official said, "By around April to May this year, we will be able to predict the overall tax revenue scale," adding, "We need to assess based on tax revenue performance and economic trends, but as of now, it is tight to achieve this year's budget target of 400.5 trillion won."

Income tax decreased by 800 billion won overall, due to a reduction in capital gains tax caused by a 55% drop in real estate transactions in November last year compared to the same period the previous year, despite increases in interest income tax and others.

Corporate tax also decreased by 700 billion won. This was due to the extension of the mid-term payment deadline for small and medium-sized enterprises from August 2021 to November by three months, which deferred installment payments from October 2021 to January 2022.

Value-added tax decreased by 3.7 trillion won due to the base effect of deferred tax revenue from January last year. This was caused by the extension of the period excluding pre-notification for individual business owners in restricted industries from October 2021 to January of the following year, which increased the confirmed VAT payment in January 2022.

Securities transaction tax decreased by 400 billion won, influenced by a 36% drop in securities trading volume from 218.2 trillion won in December 2021 to 139.6 trillion won in December 2022.

Transportation tax was 100 billion won less due to an expanded reduction in fuel tax. Agricultural and special tax decreased by 100 billion won compared to the same period last year, and customs duties fell by 300 billion won.

Choo Kyung-ho, Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance.

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