Tax Revenue Outlook for 2024 and the Medium-Term

Published on Oct., 31, 2023
Published by Tax Policy Analysis II Division

   In 2024, NABO predicts national tax revenue to reach 361.4 trillion won, marking a 6.2% increase from the 2023 forecast of 340.3 trillion won. This growth is primarily attributable to the improved tax revenue conditions resulting from the recovery of both domestic and global economies. More specifically, individual income tax and value-added tax are expected to see significant increases due to economic recovery, while corporate income tax revenues are projected to decrease because of sluggish corporate earnings in 2023.
   NABO's projection for national tax revenue in 2024 falls short by 6.0 trillion won compared to the government's budget plan of 361.4 trillion won. This variance is primarily due to NABO's projection of economic indicators for 2023 and 2024 being lower than the government's forecasts. Furthermore, this difference is partly attributed to NABO's 2023 national tax revenue prediction, which serves as the foundation for the 2024 national tax revenue forecast, being 1.1 trillion won less than the government's estimate.
   In the medium term (2023-2027), NABO predicts an average annual increase of6.6% in national tax revenue, reaching 438.8 trillion won in 2027 from 340.3 trillion won in 2023. This growth is expected to be slower than the previous five years (2018-2022), when tax revenue increased by 7.8%. The slowdown can be attributed mainly to reduced growth in tax revenue related to asset holdings or transactions, such as capital gains tax, driven by lower demand for assets due to relatively high interest rates.
   Meanwhile, when comparing the "2023-2027 National Fiscal Management Plan," NABO expects national tax revenue to be 30.7 trillion won lower in total over the five years than the government's forecast. This difference is mainly due to the government's more optimistic economic growth outlook compared to NABO's.