With the third spread of Corona 19, the face-to-face service industry was hit hard at the beginning of the year, and it is drawing attention as it plans to announce employment trends in January this year. While major tax laws were revised this year, such as the increase in the comprehensive real estate tax and capital gains tax, as a follow-up measure, the enactment rule will be promoted.
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Income decreases, but expenditures surge… Financial soundness↓
According to the Ministry of Strategy and Finance on the 6th, it is scheduled to announce the results of the deadline for total revenues including national tax revenues for fiscal year 2020 on the 9th.
Initially, the government set the total income at 48.18 trillion won in this budget last year, but it reduced 47 trillion 700 billion won in four additional rounds.
National tax revenues decreased by 12.300 trillion won from 292 trillion won to 279 trillion won, which is the effect of the 11.4 trillion won tax revenue correction at the time of the third supplement. This is to compensate for the reduction in tax revenue by issuing deficit treasury bonds in the face of economic downturn.
At that time, although the revenue adjustment was the largest in history, the conditions for revenue are uncertain. According to the January issue of fiscal trends released by the Ministry of Science and Technology last month, the cumulative tax revenue from January to November last year was 2.67 trillion won, a decrease of 8 trillion won from the same period last year.
The progress rate (95.7%), which represents the tax revenue collected from the government’s estimate according to the tax revenue adjustment, is 1.4 percentage points higher than the same month last year, but it is unclear whether or not it will achieve the 100% target within a month. This is because the company and household difficulties have increased due to the third spread of Corona 19 at the end of the year.
In 2019, national tax revenue was 29.95 trillion won, less than 1.3 trillion won from the budget, recording the Moon Jae-in administration’s first tax revenue deficit. If there is not enough tax revenue last year, it is a’taxation punk’ for two consecutive years. In response to this, the Ministry of Information and Transportation carried out a tax revenue adjustment, and it was expected that it would not be unreasonable to achieve the 100% progress rate considering that December income tax and comprehensive real estate tax are usually reflected.
This year, the financial situation is expected to continue. When the 2021 budget was announced, the government set national tax revenue to 282.8 trillion won, a decrease of 9.2 trillion won from the previous year’s budget. On the other hand, the total expenditure was set at 55.5 trillion won, an increase of 43 trillion won.
Accordingly, the deficit in the management fiscal balance (excluding social funds from the integrated fiscal balance) is expected to increase to 10.97 trillion won and the national debt to soar to 945 trillion won.
As Corona 19 prolongs, additional financial expenditure is expected to be inevitable. Currently, the third disaster subsidy is being provided to small businesses and others, but the politics are pushing for the fourth disaster subsidy. A bill is also being reviewed to compensate for the losses of self-employed people who suffered damage from business bans and restrictions.
Lee Nak-yeon, the leader of the Democratic Party, recently suggested the formation of an additional budget for the support of the victims and universal support for the people in the parliamentary bargaining group’s speech. The size of the supplement for this is being discussed as at least 20 trillion won.
The government is in a cautious position. On the 5th, Deputy Prime Minister and Minister of Economy, Trade and Energy Hong Nam-ki said in a question to the government of the National Assembly on the 5th, “Finance played an active role in the Corona 19 crisis. He stressed, “Please respect the perspective of the financial authorities as well.”
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210,000 employed people decreased last year… Rest, the most reporter ever
The National Statistical Office is scheduled to release employment trends for January 10th. Following last year’s employment cold wave, the 3rd spread of Corona 19 still remains, as it is an indicator that can determine employment conditions at the beginning of this year.
Last year, the number of employed workers decreased by 218,000 compared to the previous year, recording the largest decline since 1998 (-1276,000 people) during the financial crisis.
By month, the number of employed for 10 consecutive months from March to December of last year decreased compared to the same month last year, and continued the longest decline since April 1998 to April 1999 (16 consecutive months). With the spread of Corona 19, face-to-face service industries such as lodging and restaurants were hit hard, and the impact of workers in related industries disappeared.
The number of inactive economically active people (rested) taking a break without doing anything, such as studying or doing housework, was 256,000, the highest level since 2003 when related statistics were prepared. The number of job seekers who gave up job hunting at all due to a sharp decline in new hiring by companies reached a record high of 605,000.
On the 9th, the revision of the enforcement regulations will be promoted as a follow-up measure to the 2021 revised tax law. The government decided to increase the tax rate for housing from 0.5-2.7% to 0.6-3.0% for general housing owners and from 0.6-3.2% for 2 houses in areas subject to adjustment or from 0.6-3.2% to 1.2-6.0% through revision of the tax law this year. The corporate tax rate was raised to 6.0%.
Transfer tax The period of residence was added to the special deduction for long-term retention, and the transfer tax rate was raised from 60% to 70% for holdings for less than one year.
The enforcement rules will reflect the follow-up measures following the revision of the tax laws and enforcement decree. In the enforcement regulations, facilities subject to integrated investment tax credits and detailed business types that can apply simple VAT taxation will be accurately prescribed.
The following is the main schedule and reporting plan for the week of the Ministry of Information and Transportation, Statistics Korea, Korea Development Institute (KDI), Institute for Foreign Economic Policy (KIEP), and Institute for Taxation and Finance (KIPF).
◇ Weekly schedule
△8th (Mon)
08:30 Central Disaster and Safety Countermeasure Headquarters Meeting (Second Vice Minister, Sejong Office)
15:00 Extended Executive Meeting (Deputy Prime Minister/Second Vice Minister, closed)
△ 9th Tuesday
10:00 State Council Meeting (Deputy Prime Minister, Seoul Government Building)
14:00 Visit to the public welfare site for the New Year of ’21 (Deputy Prime Minister, Seoul City)
14:00 Food Safety Policy Committee (Vice Minister, Sejong Office)
14:00 20th annual revenue and expenditure deadline event (2nd loan, closed)
△10 days (Wed)
10:00 Emergency Economy Central Countermeasure Headquarters Meeting (Deputy Prime Minister, 1st Vice Minister, Seoul Government Building)
13:30 Regular briefing at the Central Countermeasure Headquarters for Emergency Economy (Vice Minister, Seoul Office)
◇Weekly press plan
△ 7th (Sun)
12:00 KDI Economic Trend (2021. 2)
△8th (Mon)
12:00 4Q 2020 and Annual Manufacturing Domestic Supply Trend
17:00 KDI-OECD held a cooperative research report’Research on Inclusive Growth in Korea’
17:00 Ministry of Strategy and Finance holds an extended executive meeting
△ 9th Tuesday
10:00 What’s Next? KDI held an international conference on future tasks for the Korean economy
10:00 The second new business regulation quick confirmation and exemption system enforcement result
12:00 Trend of production and retail sales of municipal service industry in the fourth quarter of 2020 and annually
14:00 Results of fiscal year 2020 total revenue and total expenditure deadline
14:00 Deputy Prime Minister Hong Nam-ki visits the public welfare site for the Lunar New Year
15:00 Promote revision of the subsequent enforcement regulations of the 2020 revised tax law
△10 days (Wed)
08:00 Employment Trend for January 2021
09:00 Analysis of employment trends for January 2021
10:00 Published the February 2021 issue of 「Monthly Financial Trends」
10:00 Published “Overview of 2021 Nara Salim Budget”
10:00 Global Economy Focus-Corona 19 vaccination status in major European countries and economic recovery forecast in 2021
13:30 Emergency Economy Central Countermeasure Headquarters Meeting