[Alpha Biz= Reporter Kim Jisun] In the first half of this year, national tax revenue decreased by 10 trillion KRW compared to the same period last year. The government explained that this decline was primarily due to reduced corporate tax revenue, stemming from poor corporate performance last year. With a significant shortfall in tax revenue anticipated again this year, the burden on the government to pass its tax law revision, which includes tax cuts, through the National Assembly is expected to increase.
According to the Ministry of Economy and Finance on the 31st, national tax revenue from January to June this year was 168.6 trillion KRW, down by 9.98 trillion KRW (5.6%) compared to the same period last year. With half of the year over, the progress rate, which represents the ratio of tax revenue collected to the annual budget, reached 45.9%, which is 6.7 percentage points lower than the recent five-year average of 52.6%.
A significant contributor to the overall decrease in tax revenue was the corporate tax, which fell by 16.1 trillion KRW (34.4%). Corporate tax accounts for over 20% of the total national tax revenue. The substantial reduction in corporate tax payments was largely due to major companies like Samsung Electronics and SK Hynix reporting losses last year, resulting in no corporate taxes being levied. The progress rate for corporate tax by June was only 39.5%, significantly lower than the five-year average of 57.9%.
Revenue from securities transaction tax, which was reduced in connection with the introduction of the financial investment income tax, also decreased by 300 billion KRW (9.5%) year-on-year. The government has already stated its intention to abolish the financial investment income tax in its tax law revision.
On the other hand, value-added tax (VAT) revenue increased by 5.6 trillion KRW (15.7%) compared to the same period last year, driven by reduced refunds and increased imports due to exchange rate effects. Income tax revenue rose by 200 billion KRW (0.3%) year-on-year, as interest income tax increased due to high interest rates.
Recent tax trends show that as housing transaction volumes have risen, capital gains tax revenue has also increased. Yoon Soo-hyun, head of the Tax Analysis Division at the Ministry of Economy and Finance, noted, "Housing transactions increased in April and May, and after about a three-month lag, we saw an increase in capital gains tax in June. We expect capital gains tax revenue to continue rising from July to September." Conversely, comprehensive real estate tax revenue is on the decline. This tax is paid in December, with additional payments due in June of the following year. However, due to the government's easing of the comprehensive real estate tax, the determined tax amount was reduced last year, leading to a 400 billion KRW decrease in tax revenue by June compared to the previous year.
The government expects that as the economy improves in the second half of the year, the tax revenue situation will also improve. Yoon added, "As corporate performance improves in the first half, many companies have decided to pay bonuses in the second half, which should lead to an increase in earned income tax revenue."
However, with the continued decline in tax revenue, especially from corporate taxes, the opposition's criticism of the government's tax law revision as a "tax cut for the wealthy" is likely to intensify. The current tax law revision is expected to reduce tax revenue by 4.3515 trillion KRW compared to the existing law, with measures including corporate tax reductions, a cut in the highest inheritance and gift tax rates, and the abolition of the largest shareholder's surcharge tax.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
