Tax collection is running ahead of pace, debt paid down

The government collected more taxes than expected in the first 11 months of last year and more than its full-year 2018 goal.

According to the Ministry of Economy and Finance on Thursday, 279 trillion won ($249.3 billion) in taxes were paid between January and November, exceeding last year’s annual goal of 268.1 trillion won. The tax-collection rate, which compares total collected versus forecast collections, was 104.4 percent.

The government collected 28 trillion won more in 2018 through November compared with the same period a year earlier. In the first 11 months of 2017, the collection rate was 100.3 percent.

If the momentum continues, 20 trillion won more than targeted was likely collected by the end of 2018.

Taxes rose across the board.

In the first 11 months of 2018, 79 trillion won in income taxes were collected, which is 9.2 trillion won more than in the previous year, while the government collected 69.4 trillion won in corporate taxes, 11.4 trillion won more than in the same period in 2017.

By November, income taxes had already reached 110.1 percent of last year’s annual goal, while corporate taxes reached 108.4 percent.

In terms of value-added tax, 68.7 trillion won was collected, 3.1 trillion won more than expected.

In November alone, the government collected 9.9 trillion won in income tax, 400 billion won more than in the same period a year earlier, while 1.4 trillion won in corporate taxes were collected, 100 billion won more than in November 2017.

The ministry said that active real estate transaction taxes had led until recently. But since the government slammed on the brakes in the sector, the real estate market contracted and contributed less than in the past. As a result, income taxes led in November.

But even the rise in income tax was not as impressive as it would seem, as much of the gain was a result of nominal increases.

As the government collected more taxes than expected, the Finance Ministry directed 4 trillion won towards the paying down of debt at the end of last year. It was the second time that the government paid down a deficit-covering bond since 2017, when 500 billion won was directed towards that purpose.

The government issued 15 trillion won of deficit-covering bonds in 2018 out of its initially planned 28.8 trillion won. It decided not to issue the remaining 13.8 trillion won.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]