Budget deficit biggest since 2000
It was the second budget deficit in a row after a much smaller deficit in 2012.
According to the Ministry of Strategy and Finance yesterday, the government collected a total of 292.9 trillion won ($272.5 billion) in revenue last year, falling short 10.9 trillion won of this year’s budget of 303.8 trillion won.
The deficit is the largest since 2000, according to ministry data.
“Although the shortfall was bigger in the late 1990s when the country was hit by the IMF bailout crisis, we have found that last year’s revenue shortfall was the biggest in the 2000s,” said Woo Byung-ryul, director at the ministry.
The receding government of Lee Myung-bak stressed the importance of fiscal soundness.
The deficit largely stemmed from declines in corporate income tax revenues last year, the ministry said.
According to ministry data, corporate tax revenue dropped 2.1 trillion won last year compared to 2012, a 4.5 percent decline.
Revenues for capital gains taxes declined 800 billion won, or 10.7 percent; transportation, energy and environment taxes fell 600 billion won, or 4.1 percent; and securities transactions taxes decreased 600 billion won, or 16.4 percent.
Income tax revenue climbed 2.3 trillion won, or 11.7 percent, and there was a 1 trillion won, or 9.7 percent, increase in general income taxes on self-employed people and income from pensions and interest.
The value-added tax also rose 300 billion won, or 0.5 percent. Inheritance tax revenue increased 400 billion won, or 6.7 percent.
The government initially set its revenue target at 303.8 trillion won, but the declines in tax collections made that goal impossible.
Total expenditure was 286.4 trillion won last year, 11.6 trillion won higher than the previous year.
Budget surpluses and deficits depend partly on economic growth rates, the ministry said.
When the Korean economy grew 2 percent in 2012, surplus turned to deficit for the first time since 2000.
“A desirable situation is when the budget surplus nears zero, rather than being excessive or a deficit,” said Koo Yoon-cheol, a high-ranking official at the ministry.
Before the global financial crisis, the government posted successive budget surpluses. The surplus surged to 16.48 trillion won in 2007.
The government believes the financial situation would improve if the economy shows solid recovery.
“If the economy grows 3.9 percent this year, the fiscal situation will be better than last year,” said Lee Suk-joon, vice finance minister.
BY SONG SU-HYUN [firstname.lastname@example.org]