Last year, the error in national tax revenue hit an all-time high. It was 61 trillion won more than the initial estimate. Amid the ongoing COVID-19 outbreak, the heads of fiscal, monetary and financial authorities discussed ways to make a soft landing for loans.
The largest national tax import error ever… 30 trillion won difference even in the second supplementary budget calculation
On the 12th, Segye Ilbo reported the national tax revenue error as the main news.
National tax revenue for fiscal year 2021 was 61 trillion won more than the initial estimate, and nearly 30 trillion won more than expected when the second supplementary budget was organized in July.
Although this is due to the fact that the economy is recovering faster than initially expected, critics say that it is necessary to predict tax revenue in more detail as it is money coming out of the people’s pockets.
The government announced on the 11th that the fiscal year 2021 total revenue and expenditure was closed.
As a result of the closing, the total revenue was 524.2 trillion won and the total expenditure was 499.9 trillion won. The surplus on the settlement of accounts, the difference, was 27.3 trillion won, and the total world surplus following subtracting 4 trillion won was recorded 23.3 trillion won.
National tax revenue was finally counted at 344.1 trillion won. It received 58.5 trillion won more than in 2020 and 29.8 trillion won more than the government expected. This is close to 30 trillion won more than the amount expected (314.3 trillion won) when the government organized the second supplementary budget in July last year. The amount of excess tax revenue (tax revenue error) is at an all-time high.
To exclude the natural increase in tax revenue due to inflation, the error rate is 9.5%, which is the highest level in three years since 2018 (9.5%).
In the fall of 2020, when the 2021 budget was first compiled, the revenue budget was set at 282.7 trillion won. Compared to that time, the tax revenue error amounted to 61.4 trillion won. The error rate is also at an all-time high of 21.7%.
By tax category, 15 trillion won in income tax and 5 trillion won in corporate tax were removed than expected at the time of the second supplementary budget. The real estate market was booming than expected and the economic recovery was quick. The world’s surplus (23.3 trillion won) also broke the record for the largest amount of excess tax in history.
Of this, 18 trillion won in world surplus in general accounts will be settled in accordance with the National Finance Act. About 40% of the excess tax is settled with local allocation tax (gold), and the rest is spent in the order of contribution to the public fund repayment fund and debt repayment.
The government expects that the remaining financial resources following going through this process will be around 3.4 trillion won. This amount to be confirmed in April can be used as an additional budget for the future.
Meanwhile, the government announced that it would redesign the estimation model to improve the accuracy of tax revenue estimation. The plan is to introduce a tax deliberation committee chaired by the head of the tax office, taking into account the economic indicators forecasts of multiple research institutes.
Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki (left) and Bank of Korea Governor Lee Ju-yeol are heading to their seats following taking a commemorative photo at a macroeconomic and finance conference held at the Bank Hall in Jung-gu on the morning of the 11th. joint coverage
◆Economic policy heads discuss ‘soft landing’ to suspend repayment of small business owners… When is the result?
Meanwhile, on the 11th, the heads of fiscal, fiscal, monetary and financial authorities gathered in one place on the 11th to discuss the household debt management plan and extension of the maturity of loans to small businesses.
Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki said in a remarks at the macroeconomic and finance meeting held at the Bank Hall in Seoul on the same day, “I would like to discuss this year’s household debt management plan, especially plans for a soft landing, such as lending and repayment to small business owners, and easing the interest rate burden.”
The explanation is that it will check whether the maturity and repayment deferral measures for loans to small businesses, which are due by the end of March, will be extended, and the deadline for supporting the self-employed through the Bank of Korea’s financial intermediary support loan.
The meeting was attended by Deputy Prime Minister Hong, Bank of Korea Governor Lee Ju-yeol, Financial Supervisory Service President Jeong Eun-bo, and Financial Services Commission Vice Chairman Do Gyu-sang. Initially, the four chiefs including Koh Seung-beom, chairman of the Financial Services Commission, were scheduled to gather in one place for the first time in regarding four months, but the vice-chairman of the province attended instead as Chairman Ko was confirmed with the novel coronavirus infection (COVID-19).
The meeting was held that day, but the content of the conversation was not disclosed. The loan repayment grace period expires in March, but whether it will end or future support measures have not been confirmed.
Deputy Prime Minister Hong emphasized, “Even if it is a foreseeable risk, thorough preparation and management are essential so that it will never become a so-called white swan that arises from failing to come up with an appropriate countermeasure.”
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