Korea’s fiscal deficit has stretched to fresh highs amid a distinctive slowdown in tax revenue collection due to expanded fiscal spending in the face of a worsening economy.

The country collected 139.5 trillion won ($118.2 billion) in taxes in the first five months of the year, down 1.2 trillion won from the same period a year earlier, according to the Ministry of Economy and Finance on Tuesday.

Data showed that the government achieved 47.3 percent of its annual tax budget target, 5.1 percentage points below the performance in the same period last year.

Cumulative tax revenue has been posting on-year declines since February. The ministry said this was largely due to the lowered value-added tax revenue following the hike in rural consumption tax from 11 percent to 15 percent.

Tax revenue in May totaled 30.2 trillion won, down 700 billion won from a year earlier. Corporate tax accounted for more than half at 15.2 trillion won, up 600 billion won on year due to the increased corporate tax installment. Income tax fell 200 billion won to 11.3 trillion won as the sharp slowdown in real estate sales resulted in reduced collection of transaction taxes.

Non-tax revenue in the January-May period was 12 trillion won, down 700 billion won on year. Fund revenue gained 3.7 trillion won to 64.3 trillion won.

Total revenue in the first five months of year reached 215.8 trillion won, up 1.9 trillion won. Total expenditure jumped 29.6 trillion won on year to 235 trillion won during the same period.

The fiscal balance, or the difference between revenue and expenditure, was a 19.1 trillion deficit in the January-May period. The management budget balance, which excludes the four major national funds such as pensions and employment insurance, showed a deficit of 36.5 trillion won. Both deficit figures were the largest since the ministry started collecting such data in 2011.

As of late May, government debt totaled 685.4 trillion won, up 9.5 trillion won from the previous month. The ministry said this was due to the time lag in the issue and redemption schedules of the bond offerings.

In April, the government proposed a rare early-year supplementary budget of 6.7 trillion won to help boost exports, spur domestic consumption and create new jobs. Asia’s fourth-largest economy has been quickly losing steam, contracting 0.4 percent in the first quarter to deliver its worst performance in a decade. The extra budget bill is still pending in parliament.

By Sohn Il-seon and Kim Hyo-jin

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