NABO Estimations & Tax Issues (Issue 5)
Published on 19 November 2018
Published by Estimates and Tax Coordination Division of the Estimates and Tax Analysis Office
I. Budget Proposal Status of Total Revenues in 2019
The government has earmarked 481.3 trillion won for the total revenue budget for 2019 (up 33.6 trillion won from the 2018 budget), which consists of 299.3 trillion won in tax revenues (up 31.2 trillion won from the 2018 budget) and 182 trillion won in non-tax revenues (non-tax and fund revenues, (up 31.2 trillion won from the 2018 budget). NABO has estimated 2019 total revenue at 483.7 trillion won (2.3 trillion won more compared to the 2019 budget proposal), which consists of 302.6 trillion won in tax revenues (3.3 trillion won more compared to the 2019 budget proposal) and 181.1 trillion won in non-tax revenues (non-tax and fund revenues, (0.9 trillion won less compared to the 2019 budget proposal).
Ⅱ. Main Content and Features of the 2018 Proposed Tax Act Revision
As of November 12th, 2018, among the 28 tax-related laws that are subject to deliberation, 583 revisions (18 by government, 565 by legislators) proposed regarding 24 of the laws are pending in the Strategy and Finance Committee. These proposed revisions of the Tax Act involve the expansion of tax incentives for wage earners and children, the strengthening of the Gross Real Estate Tax, energy tax reform as well as fiscal decentralization.
Ⅲ. Examining the Fiscal Demand for Laws Approved in the Third Quarter of 2018
Among the 145 laws that were approved in the third quarter of 2018, 31 (21.4%) budget-related bills have a fiscal impact on the central and local governments. Enforcement of these laws is expected to incur a spending increase of 141.6 billion won on average each year over the next 5 years (2019-2023).
Ⅳ. Analysis of the Major Policy Issues Regarding Estimations and Taxation
· Under the assumption that all policies under the 2019 Budget Proposal, 2018-2022 National Fiscal Management Plan and the Tax Act Revision are implemented, this report examines the transformation of the indicators of overall fiscal performance over the next decade (2018-2027), and conducts a comparative analysis against the baselines and government plans.
·This report reviews recent tax policy trends by examining the characteristics of each major tax item and analyzing relevant major policies and associated impacts.
· This report examines the content of the earned income tax credit expansion proposed by the government and conducts a comprehensive analysis of the effects of reform.
· This report provides a status update on the real estate tax scheme, examining the main content of the revised Gross Real Estate tax and its effect along with a summary of the key topics under discussion.
·This report provides an overview of local tax revenue status, and conducts a comparative analysis of the local tax revenue structure with that of OECD countries.
Ⅴ. Estimations and Tax Trends In Korea and Abroad
·This report includes an overview of the status and trends of recent national tax revenue policy.
·This report provides an introduction to tax reform trends in OECD countries with details of major tax items.
·This report offers an estimation of the additional fiscal demand required should the base pension rate be increased according to the recent government plan on increasing the basic pension rate.
·This report delivers a status update on the proposed bill regarding indoor air quality management, as well as an estimation of the additional fiscal demands that are expected to occur when some of the key items of legislation are enforced.