Last Year, 52 Trillion Won Less Collected in National Taxes

Ministry of Economy and Finance February Fiscal Trends... Income, Corporate, and VAT All Decrease

Due to factors such as the economic recession, national tax revenue last year decreased by approximately 52 trillion won compared to the previous year. As tax revenue declined, the national budget ran a deficit of about 65 trillion won up to November last year.

According to the "Fiscal Trends February Issue" released by the Ministry of Economy and Finance on the 15th, the annual national tax revenue as of the end of December last year was 344.1 trillion won, a decrease of 51.9 trillion won compared to the previous year. Compared to the originally budgeted national tax revenue of 400.5 trillion won, 56 trillion won less was collected, resulting in a progress rate of only 85.9%.

This was the impact of a decline in all tax categories, including the three major tax items: income tax (-12.9 trillion won), corporate tax (-23.2 trillion won), and value-added tax (-7.9 trillion won), due to the overall economic downturn.

Choi Sang-mok, Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance, is speaking about follow-up measures for the housing sector livelihood discussion at the Emergency Economic Ministers' Meeting held on the 14th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Jo Yong-jun jun21@

During the same period, non-tax revenue was 28.5 trillion won, down 2.3 trillion won from the previous year. This was due to a 3.7 trillion won decrease in surplus funds from the Bank of Korea. However, compared to the budget, it increased by 3.5 trillion won.

The government's total revenue, combining national tax revenue, non-tax revenue, and fund revenue, was 529.2 trillion won on a cumulative basis up to November last year, a decrease of 42.4 trillion won compared to the same period the previous year.

Total expenditure also decreased by 73.8 trillion won to 548.6 trillion won compared to the same period last year. The budget decreased by 26.2 trillion won due to the reduction of COVID-19 pandemic response projects and local allocation tax, and funds decreased by 37.2 trillion won due to the end of loss compensation payments for small business owners.

The integrated fiscal balance, which is total revenue minus total expenditure, recorded a deficit of 19.5 trillion won as of the end of November last year. Excluding the 45.5 trillion won surplus from social security fund balances such as the National Pension, the management fiscal balance, which reflects the state of the national budget, recorded a deficit of 64.9 trillion won.

Central government debt stood at 1,109.5 trillion won (cumulative as of the end of November last year). This was a net increase of 76 trillion won compared to the end of 2022. Among the debt, the balance of treasury bonds increased by 78.6 trillion won, while the balances of housing bonds and foreign exchange stabilization bonds (Oe-pyeong-bond) decreased by 1.6 trillion won and 400 billion won, respectively.

However, the government expects that central government debt will align with the government's forecast considering future treasury bond issuance and redemption schedules. When preparing last year's budget, the government anticipated that central government debt would reach 1,101.7 trillion won by the end of the year.

Han Joo-hee, Director of Fiscal Soundness at the Ministry of Economy and Finance, said, "Considering factors such as the decrease in the outstanding balance of treasury bonds, central government debt as of the end of last year is expected to converge within the government's target."

As of the end of December last year, the current value of national property was 1,375.6 trillion won, and related revenue was 371.5 billion won. In December, the total acquisition amount of national property was 12.3942 trillion won, and the total disposal amount was 19.46 trillion won. During the same period, the balance of guarantee obligations was 10.5 trillion won, down 100 billion won from the previous month, and government equity capital increased by 900 billion won to 174.2783 trillion won.

In January this year, the scale of treasury bond issuance was 12.5 trillion won (11 trillion won based on competitive bidding). Treasury bond interest rates are trending upward in line with global interest rate increases. The average interest rate for 3-year bonds rose from 3.154% at the end of December last year to 3.261% at the end of January, and further increased to 3.305% as of the 8th of this month. During the same period, the 10-year bond rate continued its upward trend from 3.183% to 3.345% and 3.400%, heading toward the mid-3% range.

The government explained, "recent treasury bond interest rates rose due to global interest rate increases influenced by the retreat of early rate cut expectations by the U.S. Federal Reserve (Fed)."

Last month's average funding cost was 3.27%, down from 3.52% the previous month, and the bid-to-cover ratio rose to 333% from 285% the previous month. Foreign net investment in treasury bonds turned into net inflow (1.6 trillion won).

The government plans to disclose total revenue, total expenditure, fiscal balance, and national debt after fund settlement in the national settlement announcement scheduled for April.

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