NABO Estimates & Tax Issues (Issue. 12)
Published on August, 31, 2020
Published by Estimates and Tax Coordination Division, Estimates and Tax Analysis Office
I. Estimation & Tax Trends
･Of the 219 legislative bills approved in the second quarter of 2020, 72 (32.9%) are subject to fiscal enforcement that will affect national and local government finances. An assessment of fiscal demand for 20 of the bills demonstrated that their implementation is expected to result in an annual revenue decline of 19.1 billion won and an annual expenditure increase of 300.8 billion won on average over the next five years (2020~2024), respectively.
･National tax revenue in the first half of 2020 was 132.9 trillion won, down 23.3 trillion won (△ 14.9%) from the same period last year (156.2 trillion won).
Ⅱ. Estimation & Tax Analysis
･Total revenues in 2019 were 473.1 trillion won, an increase of 7.8 trillion won (1.7%) from 2018 (465.3 trillion won) due to revenue increases from funds, and this was 3.3 trillion won (△ 0.7%) smaller than the revenue budget (476.4 trillion won). Although both national and non-tax revenues decreased compared to the year before, a surge in social security contributions led to a hike in total revenues compared to the previous year.
･The long-term fiscal projections for the four public pensions indicate that the fiscal balance of these pensions will generate a surplus of 0.6 trillion won (0.02% of GDP) based on the constant price in 2020. However, because a deficit of 226.7 trillion won (-5.5% of GDP) might occur in 2090, holding discussions to address fiscal issues and setting directions to achieve fiscal improvement will be necessary.
･The results of ascertaining the impact of the expansion of occupations (9 → 14 types) for the “workers in special employment types,”who are covered by industrial accident compensation insurance on the revenue and expenditure of the industrial accident compensation funds, illustrates that revenues generated from insurance premiums are estimated to stand at a total of 258 billion won and expenditures at a total of 349.8 billion won during 2020~2024.
Ⅲ. Latest Estimation & Tax Issues
･The review of the main contents and characteristics of the tax amendment bills in 2020 found that while the bills initiated by the government focus on income redistribution and improved taxation equity, the amendment bills initiated by lawmakers seem to focus on support measures to promote investment and employment, as well as those that aim to help the general citizenry and the middle class, along with consumption boosts to respond to the worsening economic conditions, etc. caused by COVID-19.
･The estimation of the size of the blind spots where employment insurance does not provide coverage based on the data published by Statistics Korea, “Economic Activity Census (additional survey by type of employment),” illustrates that the number of those who are legally excluded from employment insurance coverage is estimated at 8.574 million (6.778 million non-salaried workers and 1.796 million salaried workers), and another 3.766 million salaried workers are estimated to be without employment insurance.
･Recently, with bills proposed for the introduction of social impact bonds (SIB), this report explains the concept of SIB and the current status of SIB implementation in and out of Korea.
･This report presents the Fiscal Sustainability Report 2020 over the next 50 years (2019-20~2069-70) published in July 2020 by the UK Office for Budget Responsibility (OBR).
Ⅳ. Tax Indicators at a Glance
In this report, tax indicators such as the tax burden rate, the rate of national burden, the tax rate for major tax items, the ratio of tax revenue to nominal GDP, the ratio of local taxes to total taxes, national and local tax reduction and exemption rates, monthly national tax income and progress rate, etc. can be viewed at a glance.