Last Year’s National Tax Revenue Error Reached 60 Trillion Won
Error Rate Hits Record High of Over 20% Compared to Original Budget
[Sejong=Asia Economy Reporter Kim Hyunjung] The government, which made the largest-ever error of nearly 60 trillion won in last year's national tax revenue forecast, has decided to improve the tax revenue estimation method.
According to the Ministry of Economy and Finance on the 16th, the government is considering significantly expanding external participation in the tax revenue estimation process. It is known that they are discussing a plan to involve other offices and bureaus within the Ministry of Economy and Finance, such as the Budget Office, in addition to the Tax Policy Office currently responsible for tax revenue estimation.
Participation from external government institutions and experts will also be increased. Methods such as disclosing the basis for tax revenue estimates and expanding expert consultations during the estimation process are also being considered.
The Ministry of Economy and Finance's commissioned research project on improving tax revenue estimation methods, conducted by the Korea Institute of Public Finance, is also entering its final stage. Based on this, the government plans to apply the improved estimation method starting with the next year's revenue budget estimated in July to August this year.
A government official said, "Since there was a large error in last year's tax revenue estimation, the method needs to be improved," adding, "We are currently reviewing all possible options."
The reason the government is overhauling the tax revenue estimation method is due to the significant deviation in last year's forecast. At the time of submitting the initial revenue budget, the government had projected last year's national tax revenue at 282.7 trillion won. However, with a rapid economic recovery and a boom in asset markets such as real estate and stocks, the government raised the national tax revenue forecast to 314.3 trillion won, an increase of 31.6 trillion won compared to the original budget, during the second supplementary budget formulation in July last year.
About four months later, in November last year, the government announced that an excess tax revenue of 19 trillion won was expected compared to the second supplementary budget, and two months later, the government revised the revenue budget forecast for the third time, stating that more than 8 trillion won in additional excess tax revenue would occur. As a result, last year's total revenue size increased to over 340 trillion won, and the excess tax revenue compared to the original budget forecast approached 60 trillion won. This represents an error rate of over 20% compared to the original budget, which is the highest error rate ever recorded.
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