Korean Economy News
S. Korea’s tax revenue down $680 mn on yr in Q1 amid protracted slowdown

Lim Sung-hyun and Lee Ha-yeon

South Korea’s tax revenue in the first three months of this year shrank 800 billion won ($680 million) from the same period last year amid protracted economic slowdown, raising concerns about fiscal integrity amid heavy fiscal expansion.

According to the Ministry of Economy and Finance on Friday, the government has collected 78 trillion won in taxes for the first three months, down 800 billion won from a year earlier. The progress rate of tax revenue, or the percentage of actual tax revenue collected against annual target, was at 26.4 percent, 2.9 percent slower than a year ago.

Tax revenue decreased largely due to a 900 billion won plunge in revenue from value added tax as the government churned out various tax breaks for consumer and small business relief amid growing hardship. Transportation tax revenue also has lost 400 billion won due to the fuel tax break.

The government collected 28.8 trillion won in taxes in March, 100 billion won smaller than the previous year. Income tax revenue declined 700 billion won as some taxpayers received their 2019 Lunar New Year’s Day bonuses a month earlier. Tariff revenue also was down 200 billion won in March, while corporate tax revenue added 1.1 trillion won.

Meanwhile, the government spent 94.4 trillion won in the first quarter ended March, or 32.3 percent of 2019 budgetary spending plan of 291.6 trillion won that requires scrutiny. The public sector reported a budget execution of 10 trillion won during the period, taking up 25.5 percent of its yearly budget of 39.3 trillion won.

The country’s total first-quarter revenue fell 200 billion won to 121 trillion won, while spending rose 15.4 trillion won to 138.3 trillion won. Non-tax revenue stood at 7.2 trillion won in the January-March period, down 700 billion won on year, and revenue from state-run funds rose 1.4 trillion won to 35.8 trillion won.

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