S. Korea’s Q1 tax revenue shrinks $6.9 bn, fiscal deficit hits record high by March

2020.05.07 13:53:09

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South Korea’s tax revenue fell 8.5 trillion won ($6.9 billion) in the first quarter from a year ago due to reduced corporate income from virus fallout, while heavy spending stretched the fiscal deficit to the largest, government data showed Thursday.

According to data released by Ministry of Economy and Finance, the government collected 69.5 trillion won in taxes in the January-March period, down 8.5 trillion won from last year. Tax collection rate reached 23.9 percent of annual target, below 2.6 percentage points from a year ago and the slowest since 22.7 percent in 2015.

In March, the revenue declined 6 trillion won on year to 22.8 trillion won as earnings by big exporters tumbled on global pandemic.

The government collected 15.4 trillion won in corporate taxes in the January-March period, down 6.8 trillion won from the same period a year ago. Tax collection rate reached 24 percent of annual target, the lowest since the government began compiling related data in 2014.

The amount of corporate tax collected in March was 13.4 trillion won, down 6 trillion won from the same period last year.

Data showed that combined operating income of Kospi-listed companies on a consolidated basis fell sharply from 162 trillion won in 2018 to 102 trillion won in 2019.

Income tax revenue, meanwhile, gained 1.6 trillion won to 22.2 trillion won in the first quarter versus last year. Revenue from value-added tax reached 14.9 trillion won in the January-March period, down 1.2 trillion won from a year ago, and transportation tax revenue came to 3.8 trillion won, up 0.3 trillion won during the same period.

The country’s total revenue in the first three months of the year fell 1.5 trillion won from last year to 119.5 trillion won.

Total expenditures increased 26.5 trillion won to 164.8 trillion won during the same period. The government expedited this year’s supersized budget to relieve the economy hit by virus attack.

Of the 307.8 trillion won worth government-managed projects, 35.3 percent, or 108.6 trillion won has been executed as of end of March. The tally is the highest in 10 years.

The consolidated fiscal account posted a deficit of 45.3 trillion won, widening 28 trillion won from a year ago. The operational budget balance – which excludes four social security-related funds from the consolidated balance – recorded a deficit of 55.3 trillion won, adding 30.1 trillion won from a year ago.

The ministry said fiscal account deficit widened as the government carried out early execution of its budget spending to fight coronavirus while tax income shrank.

By Lee Eun-joo

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