"Record Excess Tax Revenue Due to 'Real Estate Misjudgment'?…Deputy Minister of Economy and Finance Refutes, Citing Economic Recovery Improvement"

Ando-geol, 2nd Vice Minister of Strategy and Finance Photo by Yonhap News

[Sejong=Asia Economy Reporter Son Seon-hee] On the 21st, the government refuted claims from some quarters that the main reason for last year's record-breaking excess tax revenue was a 'misjudgment of the real estate market outlook,' stating that "the excess tax revenue occurred due to improved tax revenue following economic recovery."

Ando-geol, Vice Minister of Strategy and Finance, held a detailed briefing on the supplementary budget bill at the Government Seoul Office that morning and, in response to questions about excess tax revenue, partially acknowledged that "there was an increase in capital gains tax and gift tax, which are influenced by the real estate market," but added, "However, a larger portion, about 70%, is attributed to corporate tax, value-added tax, earned income tax, securities transaction tax, and others." He further stated, "Exports recovery and employment improvements are happening more than expected."

The annual excess tax revenue for last year is expected to reach approximately 29 trillion won. This means an additional 10 trillion won of 'super-excess' tax revenue was generated on top of the previously announced 19 trillion won. Earlier, in July last year, tax revenue had already exceeded expectations, and when including the revised revenue estimate (31.5 trillion won), the discrepancy compared to government forecasts exceeded 60 trillion won.

Regarding the background of this unprecedented discrepancy, the opposition party recently pointed to "the government's real estate policy." Yook Kyung-jun, a member of the People Power Party, analyzed data submitted by the National Tax Service and highlighted that the tax item with the highest increase rate compared to the original budget was "capital gains tax." He criticized, "The sharp increase in real estate-related taxes such as capital gains tax, inheritance and gift tax, and comprehensive real estate holding tax is due to the Moon Jae-in administration's failure in real estate policy," adding, "The securities transaction tax also increased because, with real estate prices soaring, people who could not buy houses poured funds into stocks."

Meanwhile, as the government prepared a supplementary budget bill worth 14 trillion won by issuing 11.3 trillion won in deficit bonds from the beginning of the year, concerns have arisen that rising government bond yields could transfer the burden to private economic agents. In response, Vice Minister Ando-geol said, "We plan to spread out the timing of additional bond issuance throughout the year as much as possible and will make every effort to prevent deterioration in supply and demand conditions." He added, "If volatility becomes excessively large due to various domestic and international factors, timely market stabilization measures will be implemented in coordination with the Bank of Korea."