Gov’t expecting 15% more tax revenuesThe government expects its tax revenues for 2017 to 2021 to be over 60 trillion won ($53.1 billion) more than previous estimates, according to the country’s top economic official.
“The amount of tax revenue increased by 19 trillion won [compared to initial expectations] during the first half of this year,” said Kim Dong-yeon, minister of economy and finance and deputy prime minister for the economy, on Thursday in a keynote speech at a tax conference in Seoul. “We are optimistic about the tax income for this and next year so we expect revenue would increase by over 60 trillion won compared to the previous five-year plan.”
According to a five-year plan the Finance Ministry has for the period between 2017 to 2021, the government initially expected to rake in about 447 trillion won.
Based on Kim’s remarks on Thursday, it now anticipates its tax revenue to be around 513 trillion won, about a 15 percent increase.
“What’s more important than the rate of increase is how we spend the additional income,” Kim said. “We need aggressive expenditure by the government considering various factors such as the structural problem [of a widening income gap] in society and to make the outcome of the innovation growth policy more tangible.”
Kim said the Finance Ministry will increase total expenditure for 2019 by more than 7.7 percent.
This will be the biggest increase since 2009, when expenditure rose 10.6 percent compared to the previous year.
Next year’s government budget will be at least 461.8 trillion won, about 8 percent higher than the budget for this year, which is 428.8 trillion won.
Previously, the Finance Ministry planned to raise its total spending for next year by about 5.5 percent.
The finance minister said he agrees with studies done by international organizations including the International Monetary Fund (IMF) that Korea may start running budget deficits in the future.
In a study released last February, IMF said that Korea will experience “growing fiscal needs from age-related spending” and its fiscal balance would turn negative by 2024.
Kim said the Finance Ministry will try to maintain the level of debt of the government at 40 percent of the country’s gross domestic product (GDP) to maintain its financial condition sound.
As of 2017, Korea’s debt compared to its GDP stood at 38 percent. It is expected to be at around 39 percent by next year.
The government will determine by how much it would increase next year’s budget next week, Kim said.
BY CHOI HYUNG-JO [email@example.com]