Tax collections increase by 23.7 trillion won

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Tax collections increase by 23.7 trillion won

Despite a decline in economic growth and erosion of consumer and business confidence, the government still collected more taxes than a year ago, according to the Ministry of Strategy and Finance.

The government collected 215.7 trillion won ($185.5 billion) in taxes in the first 10 months, which was 12.3 percent, or 23.7 trillion won, more than a year ago.

As a result, the accumulated taxes are 92.7 percent of the government’s target for this year, or 222.9 trillion won. That’s 3.4 percentage points more than last year. The government collected 26.6 trillion won in October alone.

Tax collection in all areas increased. One of the biggest contributors has been the value-added tax. Between January and October, the government collected 60.2 trillion won in value-added taxes. Not only is this a 13 percent increase from last year, but it exceeds the government’s target for all of 2016 of 59.8 trillion won.

The larger coffers indicate that while economic growth slowed in third quarter, consumers continued to spend. The boom in the real estate market before the new regulations is the biggest contributing factor to the rise in value-added taxes.

The nation’s quarterly growth slowed to 0.6 percent in the third quarter, down from the second quarter’s 0.8 percent, according to an earlier report by the Bank of Korea.

“Tax collection’s improvement continued largely due to [more honest] reporting and payment of value-added taxes,” a Finance Ministry official said. “As a result, the fiscal balance deficit has improved as well.”

Corporate taxes as of October rose 19 percent, or 6.8 trillion won, to 49.6 trillion won, largely thanks to improved corporate performance.

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