Taxes, revenue fell short of targetsThe government collected more revenue in 2019 compared to the previous year, but fell short of both its revenue and tax-collection targets.
Officials are concerned that the tax shortfall, already problematic in light of increased government spending for jobs, health and welfare, could be exacerbated by growing economic uncertainty amid the spread of the Wuhan coronavirus.
The government’s total revenue in 2019 amounted to 402 trillion won ($338 billion), a 4.4 percent increase from 2018, the Ministry of Finance and Economy announced Monday. The revenue total fell 2.1 trillion won short of the government’s target of 404.1 trillion won.
Government spending reached 397.3 trillion won, an increase of 9 percent from the previous year.
The government last year collected 293.5 trillion won in taxes, a decrease of roughly 0.03 percent from the previous year. Taxes account for more than 70 percent of government revenue.
Total tax collections were 1.3 trillion won short of the government’s target of 294.8 trillion won, or 0.4 percent less. It’s the first time in five years that taxes have fallen short of the government’s target.
The 2019 collections were also a stark contrast to 2018, when the government exceeded its goal by 25 trillion won.
The government saw a significant increase in the comprehensive real estate taxes, which surged 42.6 percent, as the Moon Jae-in administration’s battle against rising housing prices included higher tax rates. But the overall decline in tax collections was mostly a product of falling income and corporate tax revenue.
The semiconductor industry’s struggles last year were considered the primary factor behind the decline in corporate taxes. The government was hoping to collect more after raising the maximum corporate tax rate from 22 percent to 25 percent.
Compared to the previous year, the government collected a total of 72.2 trillion won in corporate taxes in 2019, an increase of 1.6 percent. However, it was 7.7 trillion won less than its target at 79.3 trillion won.
As of the end of November, the central government’s debt for the first time has exceeded 700 trillion won, according to the Finance Ministry’s report.
The Moon government aggressively spent last year in the hopes of boosting the economy and job numbers.
This year, the situation is unlikely to be different, as the government’s budget has reached a record of 512.3 trillion won.
Health, welfare and job spending take up the largest portion of the government’s budget, with a 35 percent share, or 180.5 trillion won.
There are already rising concerns over the nation’s fiscal soundness. Growing government debt is likely to increase while taxes collected are likely to shrink as companies struggle from the impact of the coronavirus.
Vice Finance Minister Koo Yun-cheol said the government will increase spending amid the outbreak.
“While the economy is not in a good state, proper spending will have the effect of boosting the economy,” Koo said.
BY LEE HO-JEONG [firstname.lastname@example.org]
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