January Washing Progress Rate 10.7%, Lowest in 18 Years... "This Year's Goal Achievement is Tight" (Update)

January National Tax Revenue Falls Short by 6.8 Trillion Won
Economic Slowdown and Tax Deferral Base Effect Overlap

It was revealed that national tax revenue in January this year was nearly 7 trillion won less than the same period last year. The Ministry of Economy and Finance explained that this was due to a combination of poor economic conditions since the fourth quarter of last year and a base effect caused by deferred tax revenue from tax support measures.

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

The ministry emphasized that considering the base effect due to the decrease in deferred tax revenue from tax support (-5.3 trillion won), the actual tax revenue decline is about 1.5 trillion won. Tax revenue fluctuated in January 2022 and 2023 due to deferred tax revenue from tax support measures in the second half of 2021 and 2022. The effect of deferred tax revenue from tax support will continue until March.

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%). Jeong Jeong-hoon, Director General of Tax Policy at the Ministry of Economy and Finance, said, "The overall tax revenue scale has increased, and combined with the base effect, last year's 'high-low' tax revenue pattern and this year's 'low-high' pattern have resulted in a significant decrease. The tax revenue decline is not just a January phenomenon, and tax revenue in the first quarter will be particularly challenging."

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

Securities transaction tax also decreased by 400 billion won due to a 36% drop in securities trading volume from 218.2 trillion won in December 2021 to 139.6 trillion won in December 2022. Inheritance and gift tax also decreased by 300 billion won.

Capital tax revenue, including capital gains tax (1.5 trillion won), securities transaction tax (400 billion won), and inheritance and gift tax (300 billion won), decreased by 2.2 trillion won compared to last year.

Corporate tax also decreased by 700 billion won. This was due to the postponement of the mid-term payment deadline for small and medium-sized enterprises from August 2021 to November, resulting in 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.

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

Director General Jeong said, "We need to assess tax revenue performance and economic trends, but at present, achieving this year's budget target of 400.5 trillion won is tight. We will monitor the 'low-high' trend and review what measures to take."

[Image source=Yonhap News]

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