Tax revenues surprisingly high in the first quarter
The government’s collection of value-added tax charged on purchases of goods and services was a major contributor.
According to the Ministry of Strategy and Finance on Tuesday, the government collected 42.7 trillion won ($37.3 billion) in tax revenue as of the end of February, a 10.9 trillion won or 34 percent increase year on year. The tax collected in the first two months of this year accounted for 19.1 percent of the government’s 2016 target of 222.9 trillion won. This is a 4.4 percentage point increase compared to the rate a year ago.
“Tax revenue rose because more people have found jobs and the real estate market was active,” said Chang Jung-jin, a spokesman for the Finance Ministry’s fiscal planning bureau.
The government said it collected 13.9 trillion won in income tax, 2.8 trillion won or 25 percent more than a year ago. An active real estate market helped boost the income of people who sold residences. Income tax is the largest component of tax revenue.
Value-added tax, the second largest, grew at the fastest rate. In the first two months, the government collected 13.6 trillion won in value-added tax, which is 4.8 trillion won or 55 percent more than a year ago.
This was largely because the government cut the individual consumption tax levied on numerous luxury goods including automobiles to encourage spending. The tax cut actually ended at the end of last year, but the government revived it.
Taxes on cigarettes, which the government raised last year, also helped.
The government’s tax and non-tax income in the first two months of this year rose to 65.9 trillion won, up 11 trillion won or 19 percent from the previous year. The government spent some 68 trillion won, which created a 2.1 trillion won deficit, compared to 9.1 trillion won last year.
Government debt fell to 576.5 trillion won as of the end of February, down 3.6 percent from 556.6 trillion won last year.
BY KIM YOUNG-NAM [firstname.lastname@example.org]