Ahn Il-hwan, the second vice minister of the Ministry of Strategy and Finance (front row right), is pressing the deadline button floating on the computer monitor screen at the ‘2020 fiscal year total revenue and total revenue closing event’ held at the Korea Financial Information Service in Namdaemun-ro, Seoul on the 9th. Provide the base
Due to the economic downturn caused by the new coronavirus infection (Corona 19), last year’s national tax was lifted by 8 trillion won less than in 2019. The decline was the largest since statistics were compiled in 1961. This is the first time that national taxes have declined for two consecutive years.
According to the’Fiscal Year 2020 Total Revenue and Total Expenditure Deadline’ and’Monthly Fiscal Trend February Issue’ announced by the Ministry of Strategy and Finance on the 9th, last year’s national tax revenue was 285 trillion won, down 7.900 trillion won from 2019. It decreased for the second consecutive year following 2019 (-100 billion won). The reduction in national taxes exceeded the previous record of 2.8 trillion won in 2009.
Among the tax items, the corporate tax hit was particularly significant. Last year’s corporate tax was 55.5 trillion won, a 16 trillion won decrease from the previous year. It is said that the damage to corporate performance caused by Corona 19 was that much. The value-added tax (64.8 trillion won) also decreased by 5.9 trillion won due to the consumption slowdown. Capital gains tax and securities transaction tax increased by 7.6 trillion won and 4.3 trillion won, respectively. This is thanks to the craze for real estate and stock investment last year.
The fiscal deficit is soaring due to a sharp increase in fiscal expenditures, while income is shrinking between countries. The managed fiscal deficit from 54 trillion won in 2019 increased to 98.3 trillion won in January and November last year.
It is predicted that last year’s annual deficit, which will be released in April this year, would have reached 110 trillion won. Last year was the first time that the size of the fiscal deficit exceeded 100 trillion won.
Last year’s national tax revenue decreased by 8 trillion… First 2 consecutive years decline
The corona-related tax puncture and expenditures increased significantly
Nara Salim indicators continue to break the worst record ever. It is analyzed that last year’s fiscal deficit exceeded 100 trillion won and reached 110 trillion won for the first time in history. In the aftermath of the novel coronavirus infection (Corona 19), taxes collected by the government decreased to a record level, but the money spent was soaring. In the midst of this, concerns over fiscal soundness are growing as the ruling party insists on’selection + payment of all citizens’ for the 4th disaster support fund.
For the first time in history,’reduction in tax revenue for two consecutive years’
Last year, national tax revenue was 28.5 trillion won, down 7.900 trillion won from the previous year. In 2019, national tax revenue decreased by 100 billion won from the previous year, and then decreased for the second consecutive year. This is the first time since 1961, when related statistics can be confirmed, that national tax revenue has decreased for the second consecutive year. The decline is also the largest ever. It was much greater than the decline in 1998 (-2100 billion won) at the time of the foreign exchange crisis, as well as the 2009 financial crisis (-2800 billion won) or the 2013 (-1100 billion won) when the eurozone fiscal crisis.
On the other hand, last year government spending increased significantly. Due to the four additional budgets, total expenditure for January to November last year was 501.1 trillion won, an increase of 57.8 trillion won from the same period last year.
As the amount of money coming in and the amount of money out, the management fiscal deficit increased from 54 trillion won in 2019 to 98.3 trillion won in January and November last year. The managed fiscal balance is the result of subtracting total expenditure from the government’s total revenue and limiting the social security fund, and is a representative indicator of fiscal soundness.
Analysis says that last year’s annual fiscal deficit to be announced by the government in April would have exceeded 100 trillion won and reached 110 trillion won. Last year was the first time that the budget deficit exceeded 100 trillion won.
Real estate and stock transaction tax increased significantly
This is also the result of saving money thanks to the increase in real estate taxes and the’Donghak ants’ fever. Conversely, experts believe that if the real estate market was stable and the stock investment craze had not blown, the tax revenue decline would have exceeded 10 trillion won and the fiscal deficit would have grown even further.
When looking at last year’s national tax revenue by tax category, corporate tax declined the most, reducing 16.7 trillion won from the previous year. This is because corporate activities have contracted due to Corona 19. In the first to third quarters of last year, the cumulative operating profit of 590 listed companies on the securities market fell 6.8% compared to the same period last year. As consumption and income declined, value-added taxes (-5.900 trillion won), tariffs (-800 billion won), and transportation taxes (-600 billion won) also declined.
On the other hand, last year’s stock exchange tax was 8 trillion won, an increase of 95.8% from the previous year. It is about 4 trillion won more than the 4,900 trillion won expected when the government drafted the budget last year. Last year, the trading value of the securities market and the KOSDAQ market increased 146.5% and 153%, respectively, from the previous year.
In addition, as the real estate transaction volume increased, the capital gains tax was also lifted from 2.3 trillion won, which is 7.6 trillion won more than the previous year. The number of home sales surged 58.9% from 805,000 households in 2019 to 1279,000 households last year. Last year’s comprehensive real estate tax revenue was 3.6 trillion won, an increase of 900 billion won from the previous year.
An unexpected increase in the securities transaction tax and real estate-related tax revenue also resulted in a tax estimate error. Last year, the world surplus was 9.4 trillion won. World surplus is the sum of taxes collected more than the budget and the unused amount of the planned expenditure.
Concerns about fiscal deterioration in the ruling party’s supplementary account
The fiscal situation is not smooth again this year. In this year’s budget, a significant amount of the reserve has been exhausted as the third disaster support fund. Deputy Prime Minister Hong Nam-ki and Minister of Strategy and Finance also described it as “in fact the 5th supplementary administration.” In the midst of this, the ruling party is raising their voices every day, saying, “We need to hurry to pay the 4th disaster support fund of 20 to 30 trillion won.” Most of the money needed for the 4th disaster support fund should be raised by stamping deficit government bonds.
Seong Tae-yoon, a professor at Yonsei University’s Economics Department, warned, “The indiscriminate fiscal expansion and the resulting increase in government bond issuance will lower the national credit rating and shake the financial market and return to another state burden. He also pointed out that “in the situation of the Corona 19 crisis, support for the vulnerable is inevitable, but the country’s survival is not in a relaxed situation enough to print government bonds to provide disaster subsidies to those who have no fluctuation in income or rather increase in income.”
Reporter Eunseo Koo/Minjun Seo [email protected]