South Korea is forecast to suffer a massive tax revenue shortfall for the second consecutive year in 2024 due mainly to weak corporate activities amid an economic slowdown last year, the finance ministry said Thursday.
The government is projected to collect 337.7 trillion won (US$253.41 billion) in taxes this year, a 8.1 percent fall, or 29.6 trillion won, from its forecast made in the 2024 budget planning, according to the Ministry of Economy and Finance.
The revised amount was also 6.4 trillion won smaller than last year’s tax revenue of 344.1 trillion won, when the country suffered a record shortfall of 56.4 trillion won.
“Corporate tax revenue is expected to be reduced greater than earlier expected, among other things, as we experienced weak global trade and the sluggish semiconductor industry last year,” a ministry official said.
This illustration depicts a revenue shortfall. (Yonhap)
This illustration depicts a revenue shortfall. (Yonhap)
The corporate tax to be collected this year is projected t
o come up 63.2 trillion won, down 14.5 trillion won from its earlier forecast.
The income tax is also likely to sink by 8.4 trillion won to 117.4 trillion won.
The shortfall of 4.1 trillion won is expected from transportation, energy and environment taxes as the government extended the fuel tax cut scheme, according to the forecast revision.
But the government made it clear that it will not seek an extra budget, though it has failed to present a detailed plan on how to make up for the shortfall.
“An extra budget is supposed to be created when we experience a serious economic recession or massive layoffs. A debt sale will also add pressure on future generations and would affect our credit rating,” the official said.
The ministry said it will maximize quasi-taxes and other funds while adjusting planned projects. Subsidies for local governments could also be adjusted.
“We will come up with various ways to handle the issue in consultation with the National Assembly,” the official said.
Source: Yonhap News
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