Analysis of FY2020 Total Revenue Budget Plan
Published on 25 October 2019
Published by Income & Corporate Tax Analysis Division of the Estimates and Tax Analysis Department
Recently, the Korean economy has been witnessing a weak recovery of the real economy due to uncertainties in domestic and external conditions. Consequently, total revenues which had increased by 8.1% YoY, in 2018, are expected to increase by 1.2% in 2019, YoY, giving rise to concerns about a weakened tax revenue increase rate.
The ｢2020 Budget and Fund Management Plans｣ and ｢2019 Tax Code Revision｣ submitted by the government are deemed to have incorporated its policy initiatives driven by a resolve to address the deteriorated economic conditions characterized by investment and consumption contraction and a weakening trend in private consumption. At the National Assembly, approximately 660 legislator-proposed draft bills under the Tax Act Revision are pending, aimed at stimulating the economy, supporting employment and stabilizing the livelihoods of ordinary citizens. As such, at the upcoming regular sessions of the National Assembly, in-depth discussions will be held on immediate tasks such as investment stimulation, innovative growth, consumption facilitation and employment support; as well as on various issues related to the people’s livelihood.
This report provides a forecast of total revenue for 2020 and an in-depth analysis of the 2019 Tax Code Revision and non-tax revenue for 2020. To begin with, regarding the Tax Code Revision, estimates of the effects on tax revenues and on the tax burden were created. Also, analyses were concentrated on the effects of economic stimulation through investment support – which is a core initiative of the incumbent administration – in addition to its policy effects on each of the major revised tax items. An analysis of the Tax Expenditure Budget Report has been included from this year, in order to examine the government’s tax expenditures from a broader perspective. Next, in terms of the analysis of non-tax revenues, key issues were introduced regarding projections related to the eight types of social insurance schemes, various fees and major issues pursuant to financial accounts and funds before concluding with policy implications.