Tax collections surge as economy rebounds

Economy

Published: 08 Jul. 2021, 13:57

Tax collections surge as economy rebounds

Stacks of 50,000 won notes at Hana Bank in Myeong-dong, Seoul. The government said it has collected 43.6 trillion won more taxes in the first five months of 2021 compared to the same period thanks to rising real estate prices, bullish stock market and robust export. [YONHAP]

Tax collections jumped more than 37 percent in the first five months of the year thanks to twin booms in the stock market and real estate market.

The Economy and Finance Ministry said Thursday its total income -- including tax collections as well as profits from fund investments such as the National Pension Fund -- amounted to 261.4 trillion won ($229 billion) in the first five months of the year, 31.9 percent higher than a year earlier.

Taxes accounted for 61.8 percent of government income, which reached 161.8 trillion won in the first five months, up 36.8 percent.

The government saw robust increases in income, corporate and value-added taxes, an indicator that small businesses are seeing a recovery from the pandemic.

Income taxes in the first five months amounted to 51.6 trillion won, a 40.9 percent increase.

A major contributor to that increase was a bullish stock market and sizzling real estate market.

Some 630,000 residential units changed hands between November 2020 and last April, a 3.3 percent increase over a year earlier.

Between December 2020 and April, 332.8 billion won worth of stock changed hands, up 118 percent compared to the same period a year earlier.

Partly thanks to robust exports, which have been enjoying on-year growth of around 40 percent for the last three consecutive months, corporate tax collections in the first five months amounted to 37.9 trillion won, a 45.2 percent increase.

Spending is rising, resulting in the government collecting 33.6 trillion won in value-added taxes, a 14.7 percent increase over a year earlier.

The government reported 85 trillion won in income from other sources including investment profits from the National Pension Fund. This was a 25.7 percent increase on-year.

The latest government tax report comes as a 33-trillion-won supplementary budget is waiting approval by the National Assembly.

Most of the extra budget will be funded through additional taxes collected this year unlike previous supplementary budgets that required the issuing of government bonds.

However, even with taxes rising, the government continued to report a deficit due to spending to combat Covid-19.

In the first five months of this year, the government spent 281.9 trillion won, which is 22.4 trillion won or 8.6 percent more than the a year earlier.

As a result, it ran a 20.5 trillion won deficit. When including deficits from social security programs, the deficit amounted to 48.5 trillion won.

The government stressed that the fiscal deficit shrunk 66.5 percent in the first five months compared to a year earlier.

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