Next Year’s Tax Payment Per Capita Expected to Increase by 240,000 Won

Next year’s tax payment per capita is expected to be of 3,420,000 won, 240,000 won higher than this year’s figure.

There are many forecasts predicting that the economic recession will continue from this year until the next, and because of this, the people’s tax burden will be even heavier.

Because of depressed domestic demand, this year’s value-added tax revenues are calculated as 2 trillion won less than the original estimate. On the other hand, because of the strengthening in the taxation of real estate transactions, the transfer revenue tax is anticipated to increase by 1.5 trillion won.

On September 23, the Ministry of Finance and Economy calculated a 7.0 percent increase in the tax yield from this year’s 122.0686 trillion won to next year’s tax revenue of 130.6132 trillion won in its “2005 National Tax Revenue Budget Bill.”

Accordingly, the tax payment per capita is expected to rise from this year’s 3,180,000 won to 3,425,000 won next year. This number is calculated by dividing the total expected tax revenue from national and local tax with next year’s estimated population (48,460,590).

The tax payment per capita crossed the three million won line for the first time last year at 3,064,000 won, and is renewing its record for two consecutive years.

Heo Yong-seok, the director general for Internal Revenue and Tax Affairs of the Ministry of Finance and Economy, explained, “The size of the national budget is growing, but the rate of increase in the population is decreasing, and as a result, the tax payment per capita inevitably will increase.”

The Ministry of Finance and Economy noted that considering the 20 percent increase in corporation tax, the burden that the people carry, will not be large.

Among the national tax revenue, general accounts are expected to increase by 8.8 percent from this year’s figure to 121.0498 trillion won, while special accounts are expected to decrease by 11.7 percent to 9.5634 trillion won. This is an effect of the cancellation of local governments’ special accounts from national taxes, which brought the conversion of the 1.600 trillion won road traffic tax that was classified as special accounts to general accounts.

While the Ministry of Finance and Economy drew up the budget bill, it anticipated next year’s GDP growth at five percent, inflation at three percent, exports at $273 billion and imports at $252 billion.

However, the Ministry of Finance and Economy stated that as a result of depressed domestic demand, there would be a 700 billion won shortage in tax revenue this year.

Chi-Young Shin Ji-Wan Cha higgledy@donga.com cha@donga.com