National Tax Revenue Decreases by 39.7 Trillion Won from January to June... Continued Impact of Real Estate and Export Slump

National tax revenue in the first half of this year decreased by nearly 40 trillion won compared to a year ago. This is due to a significant drop in income tax caused by a decline in real estate transactions, and a shrinkage in value-added tax as total revenue decreased.

According to the national tax revenue status announced by the Ministry of Economy and Finance on the 31st, the cumulative revenue from January to June was recorded at 178.5 trillion won. Compared to the same period last year (218.3 trillion won), tax revenue fell short by 39.7 trillion won. Even considering the effect of tax support amounting to 10.2 trillion won, the actual tax revenue shortfall approaches 29.5 trillion won. The impact of tax support effects is estimated by tax category as follows: comprehensive income tax 2.4 trillion won, corporate tax 1.6 trillion won, value-added tax 3.4 trillion won, and others 2.8 trillion won.

The progress rate, which indicates actual tax revenue against the revenue budget, is also sluggish. The cumulative tax revenue progress rate up to June was 44.6%, 10.5 percentage points lower than last year's 55.1%. This means that only 44.6% of the 400.5 trillion won in taxes expected to be collected this year was gathered in the first half. This is the lowest level since 2000. The gap in progress rate widened compared to the previous month (9.7 percentage points). This indicates that the speed of tax collection is slowing down. Compared to the average progress rate of the past five years (53.2%), it is also 8.6 percentage points lower.

The accumulated decrease in corporate tax is cited as one of the main causes of the tax revenue shortfall. Looking at June alone, corporate tax withholding increased by 500 billion won, but due to the global economic slowdown and sluggish exports, the cumulative amount for the first half was only 46.7 trillion won. Compared to 63.5 trillion won collected in the same period last year, this is 16.8 trillion won (26.4%) less. Corporate tax this year’s government target (105 trillion won) is practically uncertain to be achieved. Jeong Jeong-hoon, head of the Tax Policy Bureau at the Ministry of Economy and Finance, said, "The decrease in corporate tax appears to be largely due to reduced operating profits of major companies."

Income tax decreased by 11.6 trillion won to 57.9 trillion won in the first half, as capital gains tax declined due to reduced real estate transactions and comprehensive income tax also decreased compared to the previous year. In particular, capital gains tax has significantly decreased compared to last year, becoming one of the tax categories showing the largest decline since January this year. The Ministry of Economy and Finance stated, "Capital gains tax alone decreased by around 1 trillion won in June compared to last year." From November last year to April this year, housing sales volume decreased by 29.0% compared to the same period last year, and pure land sales volume decreased by 37.1%.

During the same period, value-added tax was recorded at 35.7 trillion won, down by 4.5 trillion won. Transportation tax decreased by 700 billion won to 5.3 trillion won due to the temporary reduction of fuel tax. However, the government also projected that the extent of some tax revenue declines might lessen in the second half of the year. In particular, the mid-term prepayment of corporate tax is expected to be crucial for securing tax revenue in the second half. The government said, "Considering last year's overwhelming 'high in the first half, low in the second half' trend, the situation in the second half compared to the first half of this year is not significantly bad," and added, "Tax revenue will be affected by the mid-term prepayment of corporate tax in August and September this year."

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