Fiscal deficit mounts due to anemic tax revenueThe government’s fiscal deficit grew 1.5 trillion won ($1.3 billion) in the first quarter compared to a year ago, largely due to a shortfall in tax revenue.
According to the Finance Ministry yesterday, in the first three months of the year, the government posted a 23.2 trillion won deficit. Last year, it was 21.7 trillion won.
The central bank’s fiscal deficit was 19.5 trillion won in the first quarter of 2010.
It shrank to 13.3 trillion won the following year and has been increasing ever since.
The fiscal deficit does not include social security funds like the national pension fund or the teachers’ pension.
The consolidated fiscal accounts, which reflect the government’s total income and expenditures as well as social security funds, grew by 3.5 trillion won to 14.8 trillion won in the first quarter compared to 2012.
In the first three months, consolidated income was 9.5 trillion won less than a year ago at 76 trillion won, while consolidated spending was 6.1 trillion won less at 90.8 trillion won.
“The main reason the overall deficit grew is because income from taxes has fallen,” said a Finance Ministry official.
And a big reason for declining tax revenue is slow economic growth of less than 1 percent per quarter for the past eight quarters.
The Finance Ministry said that in the first quarter, income from taxes fell 7.9 trillion won compared to the previous year.
The government earlier this year projected a 12 trillion won tax revenue shortfall.
Fearing flat economic growth along with deteriorating government fiscal soundness, the National Assembly last month approved a 17.3 trillion won supplementary budget.
By Lee Ho-jeong [firstname.lastname@example.org]