Tax income to drop 17.5 trillion won per year over 5 years

The tax income is expected to fall by an average of more than 17 trillion won per year over the next five years from this year, owing to a law passed by the National Assembly in the fourth quarter of last year. Concerns over decreasing tax income are swelling fast as there have been warning signals over a shortage of tax income from earlier this year owing to economic doldrums.

According to the National Assembly Budget Office on Tuesday, the tax income between 2023 and 2027 is estimated to dwindle by an average of 17 trillion and 459.3 billion won as the set of laws passed by the National Assembly in the fourth quarter last year is enforced. The analysis was based on 15 laws passed in the fourth quarter of last year, whose fiscal impact is quantifiable.

Corporate and income taxes are expected to decrease by an average of 4.116 trillion won and 2.295 trillion won, respectively. Over the next five years, the total reduction in corporate and income taxes is estimated to be 32.059 trillion won. The reduction in comprehensive real estate tax is expected to reach 1.344 trillion won owing to the easing of transfer income taxes. Due to the revision of the tax exemption restriction law, such as the expansion of income deduction for credit card usage, the tax exemption is expected to decrease by an average of 9.571 trillion won per year.

The progress rate of tax revenue has fallen to its lowest level in 18 years as the effects of the economic downturn continue. The tax progress rate, which refers to the ratio of actual taxes collected to the target tax revenue set for the year, stood at 10.7% in January this year, the lowest level since January 2005 (10.5%).


Hee-Chang Park ramblas@donga.com · Hye-Ryung Choi herstory@donga.com