The participation of external experts is likely to expand
If the existing model shakes significantly, another side effect may be
As the national tax revenue of last year is expected to be about 60 trillion won more than at the time of the main budget, the government is revamping the tax revenue estimation method. Although the forecast for excess tax revenue has been revised twice, it is expected that excess tax revenue of around KRW 10 trillion is expected to occur again, so it hastily came up with countermeasures.
According to the Ministry of Strategy and Finance on the 16th, the government is considering a plan to significantly expand the participation of external personnel in the process of estimating tax revenue. Internally, the main goal of the reform plan is to increase the participation of other offices and bureaus in addition to the Tax Office of the Ministry of Strategy and Finance, which is responsible for estimating tax revenue.
As it has been criticized for not revealing the macroeconomic variables, which are the core of the tax revenue estimate, it has been criticized as a ‘black estimate’.
The government is planning to come up with an improvement method for such content and apply it from next year’s revenue budget estimated in July and August of this year. A government official said, “We are discussing improving the tax revenue estimate while keeping all possibilities open.”
The reason why the Ministry of Strategy and Finance revised its tax revenue estimation method was because a large-scale error occurred in last year’s tax revenue estimation. When preparing the second supplementary budget in July of last year, the government revised it to increase national tax revenue by 31.6 trillion won from the main budget. After correcting that 19 trillion won in additional excess tax revenue would be generated compared to the second supplementary budget in November of the same year, it was predicted that the excess tax revenue of 8 trillion won or more would be lifted again in two months. In 2018, an excess of 25 trillion won in tax revenue was generated, and even though a plan to improve the tax revenue estimation system was presented the following year, the forecast again failed. The error rate in the estimate of tax revenue compared to the main budget is also certain to exceed 20%, breaking the all-time high.
However, there are also objections that there were some limitations in the tax revenue estimate in the case of last year, as there were uncertainties about COVID-19 and an unexpected boom in the asset market. A government official said, “As the situation last year was different from normal, if the tax revenue estimation model is shaken too much, other side effects such as excessive tax revenue estimation may occur.”
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