February tax revenue falls short by 16 trillion won... Growing concerns over a 'punk' year ahead

Monthly Fiscal Trends for February
Slow Economic Recovery and Asset Market Slump Impact
National Budget Deficit of 31 Trillion Won
Progress Rate at 14.4%, Down 2.8%P

Concerns over tax revenue shortages due to the economic downturn are growing, as government total revenue in February decreased by 16.1 trillion won compared to the same period last year. The progress rate, which compares actual tax revenue collected against the budget, also fell by 2.8 percentage points to 14.4%.

According to the Monthly Fiscal Trends report published by the Ministry of Economy and Finance on the 13th, cumulative total revenue in February amounted to 90 trillion won, as both national taxes and non-tax revenues declined. Total revenue in February last year was 106.1 trillion won. National tax revenue was 54.2 trillion won, marking the largest-ever decrease of 15.7 trillion won. The Ministry explained that considering the base effect due to tax support measures, the actual decrease was about 6.9 trillion won.

Non-tax revenue was 5.5 trillion won, shrinking by 3.4 trillion won. This was influenced by the reduction in the Bank of Korea surplus remittance to the government, which dropped from 5.5 trillion won last year to 1.8 trillion won this year, a decrease of 3.7 trillion won.

The progress rate is also sluggish. The national tax revenue progress rate was 13.5%, 4.2 percentage points lower than 17.7% in February last year. It is lower than the five-year average February progress rate (16.9%) and is the lowest since February 2006. Non-tax revenue also fell sharply from 28.9% to 22.1%. This means the speed of tax collection is slowing down.

As a result, concerns are emerging that a ‘tax revenue shortage’ could become a reality this year. Even if the same amount of national tax revenue as last year is collected from next month, it will fall short of the revenue budget by tens of trillions of won. Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho also stated on the 7th, “This year’s tax revenue is likely to be less than the originally planned revenue budget.”

The causes cited are the slow economic recovery and the downturn in the asset market. A Ministry of Economy and Finance official explained, “The economy is not recovering as quickly as expected,” adding, “The progress rate is being significantly affected by problems in the real estate and stock markets.” This means that the sharp decline in housing sales volume and stock trading volume has worsened revenue conditions. The official also forecasted, “Securities transaction tax is expected to recover naturally, but it is uncertain whether capital gains tax will improve.”

Total expenditure in February was 114.6 trillion won, down 6.6 trillion won compared to the same period last year. In the budget sector, basic pension and parental pension each increased by 400 billion won, and the special grant for local extinction response was increased by 1 trillion won. However, due to the impact of temporary support measures such as ‘small business loss compensation and quarantine support funds’ last year, the fund sector decreased by 10.4 trillion won.

As a result, the management fiscal balance, which shows the overall national finances, recorded a deficit of 30.9 trillion won, widening by 10.9 trillion won compared to February last year. The integrated fiscal balance also showed a deficit of 24.6 trillion won, increasing by 9.5 trillion won.

Meanwhile, central government debt rose by 14 trillion won from the previous month to 1,061.3 trillion won.

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