SEJONG, June 23 (Korea Bizwire) – South Korea’s tax revenue rose in the first four months of 2015 from a year earlier, helped by more taxes collected from businesses, the government said Tuesday.
The finance ministry said it collected 78.8 trillion won (US$71.5 billion) in taxes in the January-April period, up 4.3 trillion won from the same period a year earlier.
The Monthly Public Finance report attributed the increase to more corporate taxes collected in the four-month period vis-a-vis the year before, with income taxes also rising to bolster numbers.
“The rise in corporate taxes is linked to better earnings generated by many companies last year,” the ministry said. “The rise in income tax resulted from more jobs being created overall and a steady rise in wages.”
Compared to 2014, conditions have been favorable so far, although the Middle East Respiratory Syndrome outbreak could cause problems in the coming months, it said.
During the four-month period, corporate tax earnings reached 17.9 trillion won from 15.8 trillion won tallied the year before. Income tax revenues hit 17.1 trillion won from 15 trillion won. On the other hand, value added taxes (VAT) fell by 1.1 trillion won compared to the previous year to 24.5 trillion won.
The rise in state earnings pushed up the so-called tax revenue progress rate to 35.6 percent, up 1.2 percentage points from what was expected. The progress rate measures the actual rate of taxes collected to the target revenue.
For April alone, the government collected 29.7 trillion won in taxes, with 14.2 trillion won coming from VAT and 5.1 trillion from the corporate sector.
The ministry also said total state earnings reached 132.8 trillion won in the first four months, with outlays hitting 141.9 trillion won for a 9 trillion won deficit.
The government has been spending more to prop up growth that has been losing steam in the face of weak exports and the sluggish pace of domestic consumption.
Central government debt, meanwhile, rose to 529.3 trillion won as of late April, mainly due to more state and housing bond obligations.