Tax Deficit Hits 30 Trillion Won for Second Consecutive Year: A Record-Breaking Financial Blow

◀ Anchor ▶

This year’s tax collection is expected to be nearly 30 trillion won less than initially expected.

This is the second consecutive year of large-scale tax deficits, following last year’s 56 trillion won deficit. The government said that this was due to a decrease in corporate income tax and transfer tax, and announced that it would mobilize all available resources to make up for the deficit.

This is reporter Park Young-il reporting.

◀ Report ▶

The government’s re-estimated national tax revenue for this year is 337.7 trillion won.

When the budget plan was initially announced, revenue decreased by 8.1%, or 29.6 trillion won, from 367.3 trillion won.

Although the scale has somewhat decreased compared to the record-breaking tax deficit of 56.4 trillion won last year, there has been a large-scale tax deficit for two consecutive years, and tax errors have continued for the fourth year in a row.

The decline in tax revenues is largely due to the reduction in corporate taxes.

The government projected that corporate tax collection would be 14.5 trillion won less than initially expected due to the semiconductor industry slump and shrinking trade.

The decrease in capital gains tax due to sluggish real estate transactions, the extension of the fuel tax cut, and livelihood stabilization measures such as emergency quota tariffs were also cited as reasons for the decrease in tax revenue.

[정정훈/기획재정부 세제실장]

“The shortfall in national tax revenue is due to the decline in corporate operating profits in 2023 as a result of the global complex crisis and the sluggishness of asset markets due to prolonged high interest rates.”

Despite the massive deficit, the government has decided not to pursue a supplementary budget for tax revenue.

The argument is that additional budget preparation through deficit debt issuance will increase the burden on future generations and worsen external credit ratings.

Instead, the government explained that it would make up for the shortfall by mobilizing surplus funds and not spending money on projects that would be difficult to execute within the year.

About 40% of domestic taxes are transferred to local governments as local education grants and local education finance grants. Based on the tax revenue deficit of 30 trillion won, the local government transfer funds of about 12 trillion won are also expected to automatically decrease.

The Ministry of Strategy and Finance did not disclose detailed figures, such as the size of available funds, saying it would consult with the National Assembly in the future.

This is Park Young-il from MBC News.

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