Tax takes falls in the first quarter 2019 as rates shift

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Tax takes falls in the first quarter 2019 as rates shift

The government collected 800 billion won ($680 million) less in taxes during the first three months this year from the same period a year earlier.

According to the Ministry of Economy and Finance’s monthly fiscal report on Friday, the government recorded 78.0 trillion won in tax revenue from January to March this year compared to 78.8 trillion won from the previous year. The government collected 28.8 trillion won in taxes in March, 100 billion won less than the same month the previous year.

The fall comes after the government recorded a fiscal surplus in 2018 for the fourth consecutive year as tax revenue came in above estimates.

The Finance Ministry explained that the drop was caused in part by recent changes in tax rates.

Revenue from the value-added tax fell by 900 billion won as transfers to local governments rose from 11 percent to 15 percent this year. The government added that tax revenues remained at similar levels when disregarding the impact from the change.

The report also pointed to temporary fuel tax discounts implemented in November last year. The government estimates a 400 billion won fall in transportation tax revenue as a result of the fuel tax break.

The discount was adjusted earlier this week, with the rate going from 15 percent to 7 percent, and that will remain until the end of August.

The tax collection rate in the first three months, which compares total collected versus full-year collection forecasts, was 26.4 percent, 2.9 percentage points lower than the figure for the same period last year.

The tax collection rate for corporate taxes for the period was at 28 percent, a drop of 5 percentage points from the previous year, while the figure for income tax fell 2.7 percentage points to 25.6 percent.

The central government’s debt stood at 670.3 trillion won in March, an increase of 500 billion won from February.

“With local and overseas uncertainties such as recent declines in exports and employment and the U.S.-China trade dispute, we will strengthen the monitoring of the situation,” the Finance Ministry said in the report. “Through active fiscal policies, there are plans to improve economic strength.”

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