The National Assembly Budget Office (Chief Kyung-bok Cook) published ｢2015 Revenue Bill Analysis and Mid-term Outlook on Total Revenue｣ to support the National Assembly’s deliberation on the ｢2015 Budget Proposal｣ submitted by the administration.
The total revenue in 2015 is expected to be 378.4 trillion won, which is △4.4 trillion won lower than the administration’s budget proposal (382.7 trillion won). The total revenue growth rate compared to NABO’s forecast in 2014 is 6.1%, indicating improvement from this year’s sluggish figure (1.4%) due to realization of economic recovery, etc.
National tax revenue is expected to be 218.2 trillion won, which is lower than the administration’s budget proposal (221.5 trillion won) by △3.4 trillion won due to the gap in economic forecast and the national tax buoyancy, etc. The growth rate forecast for 2015 (real/current price) was forecast by NABO as 3.8%/5.6% and by the administration as 4.0%/6.1%. NABO is forecasting the impact of expansive economic policies launched in 2014 more conservatively than the administration and is assessing the negative impact of the slowing economy and structural factors including low inflation/sluggish domestic demand of this year more significantly than the administration. Non-national tax revenue is expected to reach 160.2 trillion won, which is lower than the administration’s budget figure by △1.0 trillion won
The total revenue growth rate during 2014~2018 is expected to be an annual average of 5.3%, falling short of the economic growth rate of 5.7%, and this is due to the low growth rate of the non-national tax revenue. NABO expects that the total revenue growth rate will be somewhat lower than the figure in the administration’s mid-term total revenue plan (6.1%) because of the gap in the growth rate forecast between NABO and the administration.
While the slowdown of tax revenue continues due to the accumulated impact of sluggish domestic demand etc., tax revenue conditions have aggravated in 2014 due to the shrinking of consumer confidence due to the Sewol ferry accident (Apr. 2014), etc. Appropriate measures should be prepared as a reduction of fiscal spending seems to be inevitable this year to resolve the massive issues of tax revenue.
While tax revenue conditions are expected to improve compared to those of 2014 as the economy enters a gradual recovery track in 2015, the pace of tax revenue recovery is expected to be slower than what the government expects, as this year’s corporate performance was sluggish and tax revenue has lagged further behind the economy. As structural factors behind the sluggish tax revenue, including lower corporate tax buoyancy given the corporate income and stagnant asset market etc., are expected to be difficult to resolve in the short-term, future fiscal policies should be managed in consideration of the slowdown trend of the tax revenue growth rate.
It is necessary to review whether the government’s mid-term fiscal operation plan is repeating its optimistic forecast on tax revenue while the continued deficit of tax revenue and the rising trend of spending are threatening fiscal health.
It is necessary to be thoroughly prepared to supplement the foundation for fiscal stabilization in the mid-/long-term in terms of both tax revenue and expenditure.
The total revenue in 2015 is expected to be 378.4 trillion won, which is △4.4 trillion won lower than the administration’s budget proposal (382.7 trillion won). The total revenue growth rate compared to NABO’s forecast in 2014 is 6.1%, indicating improvement from this year’s sluggish figure (1.4%) due to realization of economic recovery, etc.
National tax revenue is expected to be 218.2 trillion won, which is lower than the administration’s budget proposal (221.5 trillion won) by △3.4 trillion won due to the gap in economic forecast and the national tax buoyancy, etc. The growth rate forecast for 2015 (real/current price) was forecast by NABO as 3.8%/5.6% and by the administration as 4.0%/6.1%. NABO is forecasting the impact of expansive economic policies launched in 2014 more conservatively than the administration and is assessing the negative impact of the slowing economy and structural factors including low inflation/sluggish domestic demand of this year more significantly than the administration. Non-national tax revenue is expected to reach 160.2 trillion won, which is lower than the administration’s budget figure by △1.0 trillion won
The total revenue growth rate during 2014~2018 is expected to be an annual average of 5.3%, falling short of the economic growth rate of 5.7%, and this is due to the low growth rate of the non-national tax revenue. NABO expects that the total revenue growth rate will be somewhat lower than the figure in the administration’s mid-term total revenue plan (6.1%) because of the gap in the growth rate forecast between NABO and the administration.
While the slowdown of tax revenue continues due to the accumulated impact of sluggish domestic demand etc., tax revenue conditions have aggravated in 2014 due to the shrinking of consumer confidence due to the Sewol ferry accident (Apr. 2014), etc. Appropriate measures should be prepared as a reduction of fiscal spending seems to be inevitable this year to resolve the massive issues of tax revenue.
While tax revenue conditions are expected to improve compared to those of 2014 as the economy enters a gradual recovery track in 2015, the pace of tax revenue recovery is expected to be slower than what the government expects, as this year’s corporate performance was sluggish and tax revenue has lagged further behind the economy. As structural factors behind the sluggish tax revenue, including lower corporate tax buoyancy given the corporate income and stagnant asset market etc., are expected to be difficult to resolve in the short-term, future fiscal policies should be managed in consideration of the slowdown trend of the tax revenue growth rate.
It is necessary to review whether the government’s mid-term fiscal operation plan is repeating its optimistic forecast on tax revenue while the continued deficit of tax revenue and the rising trend of spending are threatening fiscal health.
It is necessary to be thoroughly prepared to supplement the foundation for fiscal stabilization in the mid-/long-term in terms of both tax revenue and expenditure.