Tax collections decline and spending upTax collections are down and outlays are up, as Korea spends more to stimulate the economy.
The Ministry of Economy and Finance reported Tuesday that the government collected 139.5 trillion won ($118.2 billion) in tax revenue through May this year, 1.2 trillion won less than in the same period a year earlier.
The total tax collection rate, which compares the amount collected to the government target for the year, stood at 47.3 percent through May this year, 0.6 percentage points lower than the figure for the same period a year earlier.
The government explained that slower tax collection was due to a fall in the value-added tax (VAT) inflows and temporary reductions in the fuel tax, adding that the figure for this year is still 2 percentage points higher than the recent five-year average for the period.
The slowing tax collection rate heightens concerns that surpluses could be coming to an end.
Due to aggressive spending, the fiscal balance was at a negative 19.1 trillion won through May this year, a 27.7 trillion won decline from the same period the previous year. The operating balance, the difference between taxation and spending minus social spending, was at a negative 36.5 trillion won, a drop of 27.2 trillion won from a year earlier.
The government spent 235 trillion won through May this year, an increase of 29.6 trillion won from the same period a year earlier.
The latest figures indicate that the government has already spent 50 percent of its planned 469.6 trillion won budget for this year. This is a faster rate compared to the 47.5 percent of last year’s budget the government spent over the same period a year earlier.
“In order to stimulate the economy, we focused on early spending for this year’s planned budget,” said the Finance Ministry in the report.
The Ministry said it will manage spending to ensure a fiscal surplus of 6.5 trillion won this year.
Spending will likely increase in the second half as the government hopes to utilize 70 percent of a proposed 6.7 trillion won supplementary budget within two months of passage.
BY CHAE YUN-HWAN [firstname.lastname@example.org]
More in Economy
Better to give property than to receive a big tax bill
Border restrictions drastically cut North Korea's trade
Central bank holds rates steady, adjusts up GDP forecast
Restaurant coupons to make a comeback as an app
[INTERVIEW] Korea Forest Service head sees huge opportunity in Indonesia