Analysis of FY 2017 Total Revenue Accounts
The Korean economy in 2017 recorded a 3.1% growth rate, higher than the 2.9% of the previous year, due to factors such as the global economic recovery. Consequently, total revenue appears to be maintaining a steady trend. According to the FY 2017 settlement of accounts submitted by the government, total revenue increased by KRW 28.8 trillion from 2016 to KRW 430.6 trillion, exceeding the 2017 supplementary budget by KRW 7.5 trillion. Such an improvement in total revenue was mainly driven by the national tax revenue increase of 9.4%, which exceeded the current growth rate of 5.4%. Meanwhile, non-tax revenues that have been collected fell short of the target budget for five consecutive years since 2013. This triggers a sense of urgency for an accurate non-tax revenue estimation.
The purpose of this report is to analyze the FY2017 total revenue account settlement submitted by the government and draw implications for this year’s fiscal management as well as next year’s tax revenue budget deliberations. In particular, analysis of not only national tax revenues but also non-tax revenues has been reinforced this year. The analysis of national tax revenues included an in-depth analysis focusing on why the pace of tax revenue increases is higher than the Korean economic growth rate, recommending ways to narrow the estimation’s margin of error. The analysis of non-tax revenues set out policy implications on the future direction of fiscal management including an analysis of the cause of errors in the National Pension Service (NPS) estimations and ways to reduce the number of people with exception status related to national pension payments, as well as ways to improve the declining contribution rate of the Employment Insurance Fund.