Tax collector felt pandemic's pinch in 2020
Even the tax collector had a bad 2020, with tax revenues impacted by the Covid-19 pandemic.
It was the second year in a row, in fact, in which tax collections declined compared to the previous year, and the rate of decline last year was the sharpest since the Asian economic crisis of the late 1990s. In 1998, tax collections shrunk 3 percent year-on-year.
According to the Ministry of Economy and Finance on Tuesday, the government collected a total of 285.5 trillion won ($255.7 billion), 7.9 trillion won less than a year earlier, a 2.7-percent decline year-on-year.
Tax collections increased annually from 2014 to 2018. But in 2019, businesses struggled with several major government policies including hikes in the minimum wages and shorter working hours, and the taxes they paid shrunk.
Taxes account for more than 70 percent of government revenues.
Corporate taxes were particularly affected by the coronavirus pandemic.
The government collected a total of 55.5 trillion won in corporate taxes last year, a decline of 16.7 trillion won, or 23 percent.
Value-added taxes totaled 65 trillion won, which is 5.9 trillion won less, or 8.3 percent, than a year earlier.
The individual consumption tax shrunk 5.2 percent to 9.2 trillion won as people cut back on spending due to the pandemic.
Capital gains taxes grew, however, largely thanks to an increase in real estate transactions.
In 2020, over two million residences were bought, a 29-percent increase over 2019's 1.57 million. The government collected 23.6 trillion won in capital gains taxes — 7.5 trillion won, or 46.9 percent, more year-on-year.
A bullish stock market also contributed to government coffers thanks to the stock exchange tax. Stock exchange transactions grew 149.5 percent from 2,288 trillion won in 2019 to 5,709 trillion won last year. The government collected 8.8 trillion won in stock exchange tax, a 96-percent year-on-year increase.
The government collected a total of 93 trillion won in income taxes, which is 9.5 trillion won more, or an 11-percent year-on-year increase.
Government spending increased 14 percent year-on-year to 453.8 trillion won from 397.3 trillion won in 2019.
BY LEE HO-JEONG [email@example.com]