NABO Medium-Term Tax Revenue Projection: 2023

Published on Oct., 25, 2022
Published by Tax Analysis Division 2

   The NABO forecasts national tax revenue of 399.4 trillion won in 2023, up only by 4.6 trillion won (1.2%) compared to 2022. This marginal increase is expected because the growth rate of major tax items is projected to fall below the nominal GDP growth rate (4.6%) in relation to slowed economic recovery amid elevated economic uncertainties at home and abroad, which, in turn, is forecast to reduce tax revenue from assets due to the sluggish asset market caused by interest rate hikes, etc.
   NABO's forecast for national tax revenue in 2023 is 1.0 trillion won (△ 0.3%) less than the government’s revenue budget bill (400.5 trillion won). This is mainly due to the fact that although income tax and corporate tax are expected to exceed the government budget by 0.5 trillion won and 1.0 trillion won relevantly, the securities transaction tax is projected to be lower than the government bill by 1.1 trillion won due to stock market stagnation from interest rate hikes, etc.
   NABO projects mid-term (2022-2026) national tax revenue will grow from 394.9 trillion won in 2022 to 453.8 trillion won in 2026 at an average annual growth rate of 3.5%, which is lower than the nominal GDP growth forecast (4.2% annual average) during the same period. This is in line with NABO’s projected stagnant asset tax revenue growth rate following interest hikes, etc. that caused the slowing of asset markets beside declined corporate tax increase rate at an annual average of 2.0%, due to deteriorating trade conditions, on top of the tax law amendment, which was prepared by the government to enhance economic vitality by reducing tax burdens.
   On the other hand, compared with the 「National Fiscal Management Plan for 2022~2026」, NABO's projected national tax revenue is 21.3 trillion won less than the government's forecast based on the 5-year amount total. This difference is mainly attributable to the fact that NABO forecasted 9.2 trillion won more than the government for the reduction in tax revenue caused by the tax law amendment in 2022, etc.