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December 17, 2017, 17:13 [KST]


About NABO
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Work Scope

Home > About NABO > Role & Work > Work Scope

Analysis of Budget Bills & Account Settlements

The national budget for the year 2009 reaches over three hundred trillion Korean Won (29.3% of GDP). The budget is of quite a considerable size, and most of it comes from the hard-earned taxes of our people. In order to ensure that not a single penny is wasted, NABO undertakes thorough analysis of the budget bills and account settlements submitted by the government and if necessary, it develops counter-proposals.

NABO issues analysis reports in time with the deliberation of budget bills and account settlements by the National Assembly. These following reports are submitted to Members of the Assembly to be utilized as critical basic data for legislative decision made by the Standing Committees and the Special Committee on the Budget and Accounts in order to supervise and hold the government in check in its fiscal activities.

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  • Analyses of budget bills
  • Guidelines for budget bill analysis
  • Analyses of account settlements and results of measures taken in response to requests for account settlements corrections
  • Analyses of revised supplementary budget bills
  • Report on national finances of the Republic of Korea
  • Tasks to revise fiscal laws
  • Budget Policy Reports (Employment policies: budget and legislative tasks, etc.)
  • Budget Issue Analysis (Operation status and analysis of problems of excess funds)
  • Report on the analysis of major issues in budget bills and settlement of accounts
  • Participates in and provides data to the Subcommittee of the Special Committee on Budget and Settlement of Accounts

Bill Cost Estimation

Bridge between bills and budget → Efficient distribution of limited resources → Maintenance of the soundness of state finances

Just as consumer considers the cost before purchasing a product, the National Assembly considers the costs related to a bill when establishing a law.

NABO estimates the annual costs of the following five years after a bill is enacted, and each related party must bear the costs if the bill is passed. The estimation of related costs leads to discussions on how to fund the bill, thereby enabling more in-depth bill deliberation.

By objectively estimating the costs of bills, NABO acts as the bridge between bills and the national budget, contributing to the soundness of the country’s finances through efficient distribution of limited national resources.

Some examples of requests for cost estimations of various bills by Assembly Members are as follows:

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  • Special measures to promote the purchase of small to medium sized cars (513bn KRW over 3 years)
  • Partial revision of the National Health Insurance Act (1.5tn KRW over 5 years)
  • Partial revision of the Elementary and Secondary Education Act (11.87tn KRW over 5 years)
  • Special bill on the return of ashes of the dead who were mobilized in war (10.9bn KRW over 5 years)
  • Partial revision of the Act for the development and popularization of intelligent robots (44.3bn KRW over 5 years)

Economic Outlook and Economic & Fiscal Policy Analysis

Similar to running a household, the prudent use of taxes requires state finances to be managed according to changes in economic conditions. Based on its macroeconomic outlook, NABO estimates tax revenues according to the economic activities of the people, and analyzes the direction for state expenditure. In addition, it reviews the government’s fiscal balance and liabilities, and the feasibility of the government’s five-year National Expenditure Plan and National Liability Management Plan. Studies are also carried out on major economic policies that affect state finances, namely policies on ageing, growth potential, finances, employment, and industry.

Through a systematic and non-partisan analysis process, NABO issues the following reports to support the legislative activities of the Standing Committees and Assembly Members so that the National Assembly can effectively exercise its fiscal control of the government.

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  • NABO Annual Economic Outlook & Medium-term Economic Outlook
  • NABO Analysis of Tax Revenue Estimation
  • NABO Analysis of Tax Reform Plan
  • NABO Analysis on National Expenditure Plan
  • NABO Analysis on National Liability Management Plan
  • NABO Economic Trends & Issues
  • “Addressing Low Fertility and Ageing Society” Study Series

Tax System Analysis

The tax policy, the foundation of a country’s finances, must abide by the principle of No Taxation Without Law according to the Korean Constitution, and it must be determined and implemented after deliberation by the National Assembly, the authoritative body representing the people. NABO not only conducts research and analysis on major issues in the field of taxation, but it also suggests appropriate direction for medium to long-term taxpolicies and system developments so that the tax burden on the Korean people is of an appropriate level and taxes are used wisely.

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Tax Revenues Estimation

Running a household begins with estimating the household’s annual salary. This is similar to running a country. Accurate estimation of tax revenues forms the basis of fiscal operation.

Based on its independent macroeconomic outlook, NABO estimates tax revenues for the next five years, beginning with the current year. Estimating the size of tax revenues for the following year helps to provide a basis when deliberating on the year’s budget bill. To this end, we are devoted to the development of various estimation techniques to produce more accurate estimations of tax revenues.

The estimation of changes in tax revenues according to tax reform bills proposed by Assembly Members is another way to support the legislative activities of the National Assembly as follows:

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  • Tax Revenue Outlook Report

    (Strategy and Finance Committee)

  • Partial revision of Tax Act

    (The adjustment of the ceiling for elementary, middle, and high-school education tax deductions from an annual 2mn KRW to 4mn KRW will result in a tax reduction of 231.8bn KRW over five years)

  • Partial revision of Corporate Tax Act

    (The lowering of corporate tax rate and adjustment of the standard of assessment will reduce taxes by 30.79tn KRW over five years)

National Programs Evaluation &
Medium- to Long-Term Fiscal Needs Analysis

Large-scale national programs and major policies require monumental sizes of tax revenues. Therefore, an objective, systematic evaluation of the feasibility and performance of major government programs and policies implemented with the people’s taxes is a process essential to the prudent operation of the country’s finances.

For this reason, NABO conducts un-biased evaluations of major government programs and policies, performance management of government agencies, and offers ideas for improvement. Also, through a medium to long-term fiscal demand analysis of major fiscal programs, it provides support for more sizable, and better planned fiscal operations.

Through the following reports, NABO provides sound feedback on the government’s activities and assists the National Assembly’s supervision of the administration, thereby contributing to the desirable progress of major policies and programs.

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  • Evaluation of government performance management
  • Evaluation of Build-Transfer-Lease (BTL) Projects
  • Evaluation of the financial status of public organizations
  • Meta-evaluation of the self-evaluation of fiscal programs
  • Evaluation of programs that require management of total costs
  • Analysis of medium to long-term fiscal demand
  • Evaluation of the impact of government regulations
  • Evaluation of economic, industrial, social, and administrative programs

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