Korea reports $24 bn deficit in Jan.-Feb. as tax revenue dips

[Photo by MK DB]

South Korea saw its tax revenue fall by nearly 16 trillion won ($12.2 billion) in the first two months of this year from the same period a year ago, resulting in a managed fiscal deficit of 31 trillion won.

According to the Ministry of Economy and Finance on Thursday, tax revenue totaled 54.2 trillion won in January and February, down 15.7 trillion won from a year ago. Income taxes including capital gains tax and general income tax fell 6 trillion won on sluggish real estate transactions. Revenues from value-added tax and corporate tax also dropped 5.9 trillion won and 700 billion won, respectively.

Non-tax revenue also declined.

The Economy Ministry said that this year’s surplus funds from the Bank of Korea (BOK) dropped 3.7 trillion won from a year ago. The central bank pays surplus profits from operating foreign currency assets to the government. Its due plunged to 1.8 trillion won this year from 5.5 trillion won last year as the BOK’s asset management earnings fell on high interest rates.

As a result, the government’s total revenue including both national tax revenue and non-tax revenue in the first two months of the year stood at 90 trillion won, down 16.1 trillion won from a year ago.

Total expenditure also decreased by 6.6 trillion won to 114.6 trillion won.

Budget spending for expanded support for basic pension, parental benefits, and special budgets allocated to local governments for local extinction responses increased. Fund spending, however, dropped as temporary subsidies for loss compensation for small business owners ended.

The decline in revenues exceeded that of the total expenditure, resulting in a consolidated fiscal deficit of 24.6 trillion won, widening by 9.5 trillion won from a year ago. The management fiscal balance, which considers the government expenditure on the country’s four main social security programs, came to a deficit of 30.9 trillion won, up 10.9 trillion won from a year ago.