Unpaid Taxes Reach Record 16 Trillion Won Last Year

As the number of delinquent taxpayers grows due to the sluggish economy, the amount of unpaid national taxes reached a record high amount of 16 trillion won – excluding customs taxes.

In particular, the unpaid “deficits disposal amount” that the tax collection administration has given up on collecting has reached 700 billion won due to increase in corporate bankruptcy and persons with poor credit standing.

In the midst of this tax collecting difficulty, the government is promoting a number of large-scale government-funded projects, including the capital relocation, and an enormous amount of the budget is being invested in them. This gives a rise to the sense of concern that it is highly likely that the financial soundness will worsen.

According to materials obtained by Dong-A Ilbo on July 15 titled “Effective Management Methods of Unpaid National Taxes,” released by the Ministry of Finance and Economy and the National Tax Service, the unpaid tax amount last year that wasn’t collected by the National Tax Service was 15,997 billion and 400 million won, an increase by 7.69 percent (1,143 billion won) from 2002. The material was handed in to the National Assembly’s Committee of Finance and Economy as well.

The unpaid amount is 13.5 percent of the total tax amount collected: 118,607 billion and 900 million won. It is also the largest amount ever in record.

The deficits disposal amount makes up 7,090 billion and 900 million won out of the total amount of unpaid taxes, an increase by 14.2 percent compared to 2002. The rate of the disposal amount among the total unpaid amount was 44.3 percent, a record high.

Meanwhile, the total national tax revenue including customs taxes from January to April was 43,072 billion won, a decrease by 0.3 percent compared to the same period last year, according to the Korea Development Institute.

In particular, corporate tax collection topped out at 9,288 billion won, a large decrease of 15.4 percent compared to the same period last year.

As shown above, there are signs of difficultly in tax revenue collection, but the government has expanded the financial spending of the latter half of this year by 4,500 billion won, including the additional reassessment budget of 1,800 billion won. The government is adamant in promoting the relocation plans and other plans.

Professor Lim Joo-young at the Graduate School in Science of Taxation at the University of Seoul said, “The increase in unpaid taxes means that the economy has worsened,” and added, “If the government promotes large-scale projects with a lot of money invested in them, it is a factor that can threaten the financial soundness of the economy in the long term.”

Regarding the issue, Chief of Taxation Policy Lee Jong-kyu explained, “Even with the increase in the deficits, we are on the right track since the tax revenue is within the scope of tax income budget. There is no setback in tax revenues.”

Jin-Hup Song Ji-Wan Cha jinhup@donga.com cha@donga.com