This report examines key issues in the government’s proposed FY2013 budget and provides NABO’s revenue projections for fiscal years 2012 to 2016.
The government’s proposed budget for fiscal year 2013 is drawn up based on a relatively positive prospect for steady growth and successful privatization of public firms. Given the sluggish economy, however, NABO expects that the government’s tax and non-tax revenue targets are highly unlikely to be met.
The government forecasts that total revenues will grow 9.4 percent in FY2013, totaling KRW 373.1 trillion. Under the assumption of a 4 percent real GDP growth rate, tax revenues are projected to climb to KRW 216.4 trillion, or a 6.4 percent increase from the previous fiscal year.
On the other hand, the government appropriated a vast amount of non-tax revenues of which the collection is in doubt. Non-tax receipts comprise KRW 8.1 trillion from the disposition of government shares in public firms, KRW 2.5 trillion from the allocated surplus of the Bank of Korea into the General Revenue Account of the Government, etc.
By NABO’s estimates, total revenues in FY2013 will reach KRW 359.5 trillion, KRW 13.6 trillion (KRW 5.5 trillion without considering the sales revenue of government shares in public firms) lower than the amount forecasted by the government.
Based on different prospects for growth and the possibility of privatization of public firms, tax and non-tax revenues are forecasted to be KRW 2.3 trillion and KRW 11.2 trillion less than the government’s forecasts.
Long term, total revenues are projected to grow at an average rate of 5 percent over the 2012-2016 period; this is lower than the average growth rate of 6.3 percent, largely attributable to the slow growth in non-tax revenues. Tax revenues will grow at an average rate of 6.2 percent over that period, reaching KRW 257.3 trillion in FY2016. The growth rate of non-tax revenues, however, is forecasted to be 3.2 percent over the 2012-2016 period. Total revenues over the 2012-2016 period are projected to decrease from 26.1 percent of GDP in FY2012 to 25 percent in 2016.
Revenue Estimation Division
The government’s proposed budget for fiscal year 2013 is drawn up based on a relatively positive prospect for steady growth and successful privatization of public firms. Given the sluggish economy, however, NABO expects that the government’s tax and non-tax revenue targets are highly unlikely to be met.
The government forecasts that total revenues will grow 9.4 percent in FY2013, totaling KRW 373.1 trillion. Under the assumption of a 4 percent real GDP growth rate, tax revenues are projected to climb to KRW 216.4 trillion, or a 6.4 percent increase from the previous fiscal year.
On the other hand, the government appropriated a vast amount of non-tax revenues of which the collection is in doubt. Non-tax receipts comprise KRW 8.1 trillion from the disposition of government shares in public firms, KRW 2.5 trillion from the allocated surplus of the Bank of Korea into the General Revenue Account of the Government, etc.
By NABO’s estimates, total revenues in FY2013 will reach KRW 359.5 trillion, KRW 13.6 trillion (KRW 5.5 trillion without considering the sales revenue of government shares in public firms) lower than the amount forecasted by the government.
Based on different prospects for growth and the possibility of privatization of public firms, tax and non-tax revenues are forecasted to be KRW 2.3 trillion and KRW 11.2 trillion less than the government’s forecasts.
Long term, total revenues are projected to grow at an average rate of 5 percent over the 2012-2016 period; this is lower than the average growth rate of 6.3 percent, largely attributable to the slow growth in non-tax revenues. Tax revenues will grow at an average rate of 6.2 percent over that period, reaching KRW 257.3 trillion in FY2016. The growth rate of non-tax revenues, however, is forecasted to be 3.2 percent over the 2012-2016 period. Total revenues over the 2012-2016 period are projected to decrease from 26.1 percent of GDP in FY2012 to 25 percent in 2016.
Revenue Estimation Division