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Title NABO Estimations & Tax Issues (Issue 4)

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  • Date
    2018-08-17

NABO Estimations & Tax Issues (Issue 4)


I. Accounts Settlement of Total Revenues in FY 2017
   Total revenues of FY 2017 amounted to KRW 430.6 trillion (an increase of KRW 28.8 trillion from the previous year and KRW 7.5 trillion higher than the 2017 supplementary budget), from which tax revenue represents KRW 265.4 trillion (an increase of KRW 22.8 trillion from the previous year and KRW 14.3 trillion higher than the 2017 supplementary budget) and non-tax income revenue (non-tax and fund income) represent KRW 165.1 trillion (an increase of KRW 5.9 trillion from the previous year and KRW 6.9 trillion higher than the 2017 supplementary budget).

 

Ⅱ. Review of the Scorekeeping of Bills Approved in 2Q 2018
   In the second quarter of 2018, a total of 91 legislative bills were approved, 30 (33%) of which have an impact on the finances of the central and local governments. The implementation of the relevant laws is expected to result in an annual decrease of KRW 337.1 billion in revenue and a KRW 103 billion increase in spending on average, over the next 5 years (2019-2023).

 

Ⅲ. Analysis of Major Policy Issues Regarding Estimations & Tax
 -Examined the status and content of budget-related bills on expanding unemployment benefits and displayed the additional fiscal demands incurred by an extended period of benefits (a 30-day extension for unemployment benefit allowance receipt).
 -Examined the current state of the simplified taxation system, mainly regarding the recently discussed simplified tax standard adjustments agenda; estimated the decreasing volume of tax income caused by the adjustments of the number of simplified business owners and the effective tax rate of the simplified taxation scheme due to such adjustments as well as reviewed tax issues that need to be discussed in parallel.
 -Examined the recent trends of disclosed real estate prices and analyzed the impact of increased disclosed prices on the increase of property tax revenue and the number of taxpayers subject to a comprehensive real estate tax and the increase of such tax income.

 

Ⅳ. Tax Trends in Korea and Abroad
 -The key changes made in the 2018 Tax Code Revision include an expansion of labor and child benefits, real estate reform and energy tax system reform. This revision is characterized by the strengthening of income redistribution and decreased tax revenue. An evaluation of 1 preliminary feasibility assessment, 12 in-depth assessments and voluntary assessments of 88 sunset clauses that expire in 2018 have been conducted, while reviews of 20 cases designated by the Minister of Strategy and Finance for the 2018 special taxation will be incorporated in the Tax Code revision in September.
 -There was an introduction of the recent net wealth tax trends of OECD member countries based on The Role and Design of Net Wealth Taxes in the OECD, 2018.
 -Summarized the current status of Korea’s senior income guarantee system and reviewed the laws that have been revised to enhance the level of senior incomes, especially on issues regarding fiscal demand.
 -Summarized the current system for improving voting convenience among the disabled and computed additional fiscal demands following the legal revisions made by the 20th National Assembly to reinforce and strengthen disabled people’s right to participate in politics.
 -Examined the state of the government’s comprehensive measures against dust particles, which cause a serious problem, and mapped out additional fiscal demand to support budget-related bills proposed on this issue.

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