Continued Decline in Tax Revenue... 43 Trillion Won Less Collected

National tax revenue through July this year has decreased by more than 43 trillion won compared to the same period last year. As corporate earnings worsen and the real estate market stagnates, leading to a continued decline in housing transactions, the scale of the tax revenue shortfall is snowballing.

The Ministry of Economy and Finance announced this information in the "July National Tax Revenue Status" report on the 31st. National tax revenue from January to July this year totaled 217.6 trillion won, which is 43.4 trillion won (16.6%) less than the same period last year.

Last month as well, national tax revenue decreased compared to the previous year, further expanding the cumulative tax revenue decline from January to July beyond the 39.7 trillion won decrease recorded through June. July's national tax revenue was 39.1 trillion won, down 3.7 trillion won from one year earlier. The progress rate against the July national tax revenue budget stood at only 54.3%, significantly below the progress rates of 65.9% compared to the same month last year and 64.8% compared to the average of the past five years.

The decline in national tax revenue was led by corporate tax revenue. Through last month, corporate tax revenue amounted to 48.5 trillion won, down 17.1 trillion won (26.1%) from the same period last year. This was due to reduced corporate operating profits and a base effect caused by an increase in advance payments of interim tax installments made last year. The cumulative decrease in corporate tax revenue slightly increased compared to the previous month's cumulative figure of 16.8 trillion won.

Income tax revenue through last month was 68 trillion won, down 12.7 trillion won (15.8%) from the same period last year. Income tax revenue in July alone decreased by 1.1 trillion won compared to one year earlier, further enlarging the cumulative decline. The decrease in income tax revenue was mainly due to a reduction in capital gains tax resulting from fewer real estate transactions. The Ministry of Economy and Finance explained that a base effect also contributed to the cumulative decrease this year, as comprehensive income tax revenue had increased until February last year due to extended interim payment deadlines for small-scale self-employed individuals.

Value-added tax revenue collected through July was 56.7 trillion won, down 6.1 trillion won (9.7%) from the same period last year. This is analyzed as a base effect caused by decreased imports and tax support measures. The transportation, energy, and environment tax collected through last month was 6.2 trillion won, down 700 billion won (9.5%) compared to the same period last year due to the temporary reduction in fuel tax. Comprehensive real estate tax in July was 1.7 trillion won, down 300 billion won from one year earlier. Education tax increased by 300 billion won (9.9%) to 3.1 trillion won compared to the previous year.

Park Geum-cheol, Director General of Tax Policy at the Ministry of Economy and Finance, explained, "Capital gains tax and corporate tax have a significant impact on tax categories, and corporate earnings and other factors were much worse than the forecasts made last year due to economic conditions, which affected the results. The decrease in capital gains tax caused by reduced real estate transactions also influenced the decline in tax revenue."

The government plans to revise its tax revenue forecast and announce it in early September. The tax revenue revision is a process by which the Ministry of Economy and Finance adjusts tax revenue targets by reflecting changed economic indicators to prevent discrepancies in tax revenue. Director Park stated, "We will promptly work on and disclose the revised forecast based on accurate information."

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