NABO Fiscal Estimates & Tax Issues (Issue. 23)

Published on June 23, 2023
Published by Estimates and Tax Coordination Division

I. Trends and Issues in Fiscal Estimates
 ·(Review of fiscal demand from legislative bills approved in Q1 of 2023) Out of the 173 legislative bills approved in Q1 of 2023, 60 bills (34.7%) are subject to fiscal enforcement by state and local governments. Based on our estimation, it is expected that implementation of 27 bills will result in a reduction in revenue of 2.2 trillion won on average and an increase in expenditure of 69.5 billion won on average per year over the next five years (2023-2027).
 ·(Legislative trends in fertility treatment support and fiscal implications) Regarding the government’s policy on fertility treatment, including support for treatment expenses, fertility treatment leave, and tax credit for medical costs of fertility treatment, we calculated the additional fiscal demand estimated over the next five years (2024-2028).
 ·(Analysis of civil service pension schemes in major countries and their implications) We conducted an analysis of the current status of civil service pension schemes in Korea as well as other major countries, including Germany, the United Kingdom, Canada, Sweden, and Japan, to draw implications for Korea’s public pension reform plans.
 ·(Survey results on the use of cost estimates) Based on the survey results of the using of cost estimates for legislative bills, we reviewed measures to facilitate their use and improve work performance.

Ⅱ.Trends and Issues in Tax
 ·(Trends in global tax expenditures: GTED) We analyzed data from the Global Tax Expenditures Database, , to understand the details of tax expenditures, such as the ratio of tax expenditures to GDP and tax expenditures by tax base, beneficiaries, and tax exemptions.
 ·(Discussions on taxation of private pension to enhance income security for seniors) We reviewed the current taxation of pension schemes in Korea and other major countries and the ongoing discussions on facilitating private pensions to complement the low income replacement rate of public pension schemes.
 ·(Analysis of factors contributing to changes in capital gains tax revenue by asset type) We analyzed capital gains tax revenue into different components – the number of filings, capital gains realized per filing, the ratio of tax base to capital gains, and effective tax rate – and how these factors contribute to increases and decreases in tax revenue in order to identify the causes for the increase in capital gains tax revenue and heightened volatility.