Tax revenue reaches record high
The Ministry of Strategy and Finance said it collected 242.6 trillion won ($210.9 billion) in taxes, 24.7 trillion won, or 11.3 percent, more than it collected in the previous year. The 24.7 trillion won year-on-year increase is the biggest in its history.
The government’s tax collection posted a deficit when compared to the budget spent for the third consecutive year starting from 2012. It swung to a surplus in 2015 and has continued in a surplus for the last two years.
Last year, the government’s yearly target for taxes was 232.7 trillion won. It collected 9.8 trillion won more than they expected. The government raised its target to execute a supplementary budget worth some 10 trillion won to boost the sluggish labor market and companies undergoing turnaround plans.
“The tax revenue rose largely due to rise in corporate taxes as companies have become more profitable, while the real estate market has rebounded as well,” said Baek Byung-gap, a director at the Finance Ministry.
“We tried to avoid running into a deficit last year by setting the target amount more conservatively earlier last year considering the supplementary budget. We thought the tax revenue in the second half of the year would drop but it didn’t happen.”
Corporate taxes collected by the government rose 7.1 trillion won from 45 trillion won in 2015 to 52.1 trillion won last year.
According to the ministry, the net profit before taxes for companies listed on the local stock markets rose 18.7 percent year on year from 53.4 trillion won in 2014 to 63.3 trillion won in 2015.
Income taxes rose from 60.7 trillion won in 2015 to 68.5 trillion won last year as well largely thanks to the boom in the real estate market, more number of workers and increased wages in general, the government said.
Income taxes of workers rose 3.9 trillion when compared to the previous year as average wages for full-time workers at companies with more than five employees rose 4 percent year on year to 3.37 million won. The number of full time workers in the country also increased from 12.6 million to 12.9 million.
Transfer taxes collected by the government rose 1.8 trillion won from the previous year, as there were more housing transactions in the Seoul metropolitan area, which tends to be more expensive than other regions, last year, while nationwide housing prices rose as well.
The government said housing transactions dropped 3.3 percent year on year from 51 million to 49.3 million in 2016. However, transactions in the Seoul metropolitan area jumped 4.9 percent in the same period. Housing prices also rose 2.4 percent year on year in 2015 and 2.7 percent last year as well.
Tax collection on customs duties, on the other hand, dropped 0.5 trillion won in 2016 from a year ago as Korea imported fewer goods from abroad last year.
BY KIM YOUNG-NAM [firstname.lastname@example.org]