NABO Estimates & Tax Issues (Issue 13)
Published on 26 November 2020
Published by Estimates and Tax Coordination Division of the Estimates and Tax Analysis Office
I. Estimations and Taxation Trends
·Among the 91 legislative bills approved in the third quarter of 2020, 27 (29.7%) have an impact on the finances of national and municipal governments. Regarding 7 bills of which an estimation can be made, enforcement of the bills is expected to result in an annual increase of 3 trillion 605 billion Korean won in revenue and 119.3 billion won in expenditure on average, over the next five years (2021-2025).
·As of the third quarter of 2020, cumulative national tax revenues reached 214.7 trillion won, 13.4 trillion won less (△5.9%) than the same period of the previous year (228.1 trillion won).
Ⅱ. Estimations and Taxation Analyses
·(Estimation of Total Revenues in 2021) According to NABO estimations, the total revenues for 2021 will reach 481.0 trillion Korean won, 10.3 trillion won (2.2%) higher than the 2020 estimations and 2.0 trillion won lower than the proposed 2021 budget (483.0 trillion won). National tax revenues are expected to increase by 3.9 trillion won (1.4%) from the 2020 estimates (280.9 trillion won) to 284.7 trillion won, whereas non-tax revenues are expected to reach 196.3 trillion won, an increase of 6.4 trillion won (3.4%) from the 2020 estimates (189.9 trillion won).
·(Analysis of the 2020 Tax Code Revision) At the examination of the Tax Code revision, discussions will be held with a focus on stimulating investments and consumption to overcome the economic crisis, strengthening support for ordinary citizens and micro enterprises, income redistribution and improving taxation equity. The cumulative effects of the revised Tax Code are expected to reach 0.64 trillion won over the next five years (2021-2025).
·(Analysis of the Estimated 2021 Non-Tax Revenues) The budget proposal for non-tax revenues in 2021 is 200.2 trillion won, 9.1 trillion won (4.8%) higher than the 2020 supplementary budget (191.1 trillion won). When formulating non-tax revenue budget plans moving forward, it is necessary to thoroughly consider factors such as institutional changes, asset sales plans, near-term trend changes and recent tax receipts.
Ⅲ. Estimations & Tax Current Issues
·(Transformation in the Usage of Medical Services following the Spread of COVID-19 and Implications) Despite the demand for diagnosing and treating COVID-19, the total usage of medical services in Korea decreased YoY in terms of total consultation fees, number of patients and clinic visitation days. There was a significant drop in public health clinic visits among care facilities, consultations regarding respiratory diseases among different types of illnesses and patients under 10 years old among all age groups, while an increased number of patients sought medical services for treatment of mental illness.
·(Tax Policy Reform Trends among OECD Member Countries) A summary is provided of the OECD report, Tax Policy Reforms 2020, published in September.
Ⅳ. Tax and Fiscal Indicators at a Glance
This section consists of charts and tables visualizing tax and fiscal indicators including total expenditures and total revenues; timeline of fiscal balance; tax burden ratio, social security burden ratio and the public’s burden ratio; national and local tax volume; tax volume trends categorized by tax item; tax revenue progress rate; the total revenue budget proposal for 2021 as well as the tax reduction rate.