Korean Economy News
Korea’s tax revenue falls $7 bn to cause largest fiscal deficit of $47.3 bn by April

Fiscal deficit stretched to a new record-high of 56.6 trillion won ($47 billion) as of April this year as the South Korean government spending to fight COVID-19 ballooned whereas more than $7 billion less tax was collected.

According to data released by the Ministry of Economy and Finance, the government collected 100.7 trillion won in taxes in the January-April period, down 8.7 trillion won ($7.3 billion) from the same period a year ago. Tax collection rate reached 34.6 percent of annual target, down 2.7 percentage point during the same period.

In April, the government collected 31.2 trillion won in taxes, down 0.2 trillion won from a year ago. The amount of income tax was 6.6 trillion won, up 1 trillion won, and corporate tax 6.4 trillion won, up 3.7 trillion won.

In March, the government had collected 6 trillion won less in corporate taxes. In April, however, the amount of corporate taxes increased as installment payment of reported taxes for March was added one month earlier as to last year.

In the January-April period, the government collected 21.7 trillion won in corporate taxes. Tax collection rate was 33.7 percent.

Income tax, meanwhile, increased in April as transfer income tax gained 700 billion won from a year ago amid a surge in real estate transactions.

In the January-April period, income tax reached 28.8 trillion won and tax collection rate 32.6 percent.

Revenue from value-added tax reached 14.5 trillion won in April, down 2.6 trillion won from a year ago. The government extended value-added tax payment period amid coronavirus outbreak.

In the January-April period, the government collected 29.5 trillion won in value-added tax.

Total expenditures, meanwhile, increased 13 trillion won to 209.7 trillion won in the January-April period. Its consolidated fiscal account posted a deficit of 43.3 trillion won. The deficit narrowed from 45.3 trillion won in the January-March period.

Korea’s operational budget balance – which excludes four social security-related funds from consolidated balance – showed the largest deficit of 56.6 trillion won in the January-April period since the government began compiling related data in 2011. In the January-March period, the deficit reached 55.3 trillion won.

As of end of April, central government debt reached 746.3 trillion won, up 14.7 trillion won from the end of March. It is the largest monthly increase since 2014 as new debts were created to fund supplementary budgets.

Of 307.8 trillion won budget set aside for projects led by the government and public institutions for early execution this year, a total 137.7 trillion won or 44.7 percent of total has been spent by the end of April.

By Lee Eun-joo

[? Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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