NABO Fiscal Estimates & Tax Issues (Issue. 21)

Published on December 16, 2022
Published by Estimates and Tax Coordination Division

I. Fiscal Estimation & Tax Trends
 ·(Review of fiscal demand for legislative bills approved in Q3 of 2022) Of the 48 legislative bills approved in Q3 of 2022, 29 (60.4%) are subject to fiscal enforcement by state and local governments, thus their fiscal standing will be affected afterwards. Implementation of 11 bills, to which a cost estimation has been made, is expected to result in an annual revenue decline of 5,013 trillion won and an annual expenditure increase of 3,475 trillion won on average over the next 5 years (2023~2027).
 ·(Total revenue performance and trends in 1H of 2022) Total revenue in the third quarter of 2022 was 483.2 trillion won, an increase of 40.9 trillion won (9.2%) from the same period in the previous year (442.4 trillion won). This is mainly attributable to an upward trend in income tax, corporate tax and value added tax revenues.
 ·(Government debt and sovereign bond issuance trends in Q3 of 2022) The government debt (central government) in third quarter of 2022 was 1,029.1 trillion won, of which the balance of national treasury bonds was 931.4 trillion won, an increase of 87.7 trillion won compared to the end of 2021. In the third quarter of 2022, the cumulative issuance of national treasury bonds was 144.2 trillion won, and of them, the cumulative deficit-financing in general accounting was 74.0 trillion won.

Ⅱ. Fiscal Estimation & Tax Analysis
 ·(Analysis of the occupational pension schemes and fiscal changes in Korea) The progress of introduction, advancement, and reform of Korea's occupational pension schemes was reviewed and related fiscal changes were analyzed.
 ·(Fiscal demand analysis to improve mobility for the transportation vulnerable) Current status of free transportation assistance of mass rapid transit (MRT) in urban areas and cases of public transportation fare assistance in major countries were reviewed, and change in costs for implementing free MRT due to the increasing elderly population, etc. was estimated for each scenario.
 ·(Estimate of tax revenue effects related to income tax bracket adjustment of standard tax base) The history of Korea's income tax bracket revision of the standard tax base and the current status of the income tax burden were reviewed, and the current status of legislation related to tax bracket adjustment and tax revenue effects were examined.

 
Ⅲ. Estimation & Tax Issues
 ·(Discussion on the introduction of fiscal rules and overseas trends) Discussions on the introduction of fiscal rules in Korea and international trends related to the fiscal rule implementation were reviewed.
 ·(Pension reform trends in Korea and major OECD countries) Fiscal status of the national pension and basic pension, and pension reform trends in major OECD countries were reviewed.

Ⅳ. Tax and Fiscal Indicators at a Glance
  This section consists of charts and tables visualizing tax and fiscal indicators including total expenditures and total revenue; a timeline of fiscal balance; national tax revenue, non-tax revenue, the public’s burden ratio, tax burden ratio, income tax ratio, corporate tax ratio and value-added tax ratio.