SEOUL, Apr. 17 (Korea Bizwire) — South Korea collected a record amount of local and central government taxes last year, official data showed Sunday, with the numbers likely to go up in the coming years.
According to data by the finance and interior ministries and the central bank, Seoul brought in 318.1 trillion won (US$278.5 billion) in taxes with the national tax burden ratio hitting the second highest level of 19.4 percent. This marks a 0.9 percentage point gain from the burden ratio of 18.5 percent reached in 2015, and the highest tallied since the 19.6 percent reported in 2007.
The ratio compares taxes collected to the gross domestic product with higher numbers translating into greater burden for ordinary people and companies.
Of the total dues received, 242.6 trillion won were central government taxes, up 11.2 percent from a year earlier, with the rest being taxes collected by regional authorities. Regional taxes rose 6.3 percent on-year to 75.5 trillion won.
Government ministries and the Bank of Korea said that income, corporate and value-added taxes all surged by more than 7 trillion won, respectively, in 2016 from the year before, while dues for energy, transportation and environmental protection all declined.
Local observers, meanwhile, said that taxes collected by the government will continue to grow as well as the tax burden ratio with most presidential contenders having called for more welfare outlays to meet the country’s rapidly aging population.
Asia’s fourth largest economy has generally been cited as having spent less of its resources on welfare compared to other Organization for Economic Cooperation and Development member states, although this will gradually change down the line.
Kim Chun-koo, a researcher at the Hyundai Research Institute, said the future government needs to build solid social consensus on raising taxes so as not to cause complications.