This report aims to assess budgetary issues on FY 2012 Revenue Bill. Major budgetary issues on FY 2012 Revenue Bill include the following:
Firstly, the accuracy of administration’s tax revenue estimation needs to be improved. The National Assembly Budget Office (NABO) points out some errors in the estimation of tax effects from the “2011 Tax Revision Proposal,” such as overestimation of the effects of tax deduction from credit card usage by 507 billion won and underestimation of the effects of Earned Income Tax Credit (EITC) expansion by 125 billion won. In addition, the government’s tax revenue estimation in 2012 does not correspond with its macro-economic outlook, due to comparatively conservative forecast of tax revenue of the Government as opposed to optimistic economic growth outlook.
Secondly, the 2012 non-tax revenue plan includes revenues from the privatization of public enterprises. Considering uncertainties in the execution of privatization plans due to adverse market conditions, the 2012 non-tax revenue estimation of the Government seems to be overestimated.
Finally, the 2011–2015 budget plan of the government sets up a fiscal goal of balancing the budget by 2013-one year ahead of its original schedule. However, according to NABO’s analysis, this goal is difficult to achieve, since it is based on relatively optimistic economic outlook and timely sales of government’s shares in public enterprises as scheduled.
Firstly, the accuracy of administration’s tax revenue estimation needs to be improved. The National Assembly Budget Office (NABO) points out some errors in the estimation of tax effects from the “2011 Tax Revision Proposal,” such as overestimation of the effects of tax deduction from credit card usage by 507 billion won and underestimation of the effects of Earned Income Tax Credit (EITC) expansion by 125 billion won. In addition, the government’s tax revenue estimation in 2012 does not correspond with its macro-economic outlook, due to comparatively conservative forecast of tax revenue of the Government as opposed to optimistic economic growth outlook.
Secondly, the 2012 non-tax revenue plan includes revenues from the privatization of public enterprises. Considering uncertainties in the execution of privatization plans due to adverse market conditions, the 2012 non-tax revenue estimation of the Government seems to be overestimated.
Finally, the 2011–2015 budget plan of the government sets up a fiscal goal of balancing the budget by 2013-one year ahead of its original schedule. However, according to NABO’s analysis, this goal is difficult to achieve, since it is based on relatively optimistic economic outlook and timely sales of government’s shares in public enterprises as scheduled.
Revenue Estimation Team