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| A ship stacked with containers departs a port in Busan, May 10. Yonhap |
By Yi Whan-woo
Korea's fiscal deficit surpassed 90 percent of the total amount projected for all of 2023 in the first three months of the year, data showed. The government is struggling with falling tax revenue while clinging to its belt-tightening policy to improve financial soundness.
Announced by the Ministry of Economy and Finance, the data showed tax revenue amounted to 145.4 trillion won ($108.9 billion) in the January-March period, down 25 trillion won from a year earlier.
The ministry said the decline in tax revenue resulted in a fiscal deficit of 54 trillion won, which accounts for 93 percent of the estimated shortage for the entirety of 2023 ― 58.2 trillion won.
"The data suggests the government has been pushed into a corner maintaining a solid fiscal balance in just the first three months of the year," a source familiar with the government said.
The amount of taxes collected in the first quarter accounted for 21.7 percent of the government's yearly target of 400.5 trillion won.
Such a rate of tax collection lags behind the annual average of 26.4 percent seen over the past five years and also marks the slowest pace since 2000.
The source viewed the government's struggle in tax collection will continue in the coming months, noting the fiscal deficit is related to reduced corporate tax collection amid a prolonged export slump.
The source also noted the government remains unchanged in lessening the tax burden for corporations under its market-driven economic vision.
According to the Korea Customs Service (KCS), exports slid by 10.1 percent in the first 10 days of May, after the country reported a fall in outbound shipments for the seventh month straight as of April.
Consequently, corporate tax shrank 6.8 trillion year-on-year to 24.3 trillion won in the first quarter of 2023.
Income tax also dropped by 7.1 trillion won year-on-year to 28.2 trillion won, in the wake of a fall in housing transactions and a prolonged delay in small businesses' payment of capital gains tax and other relevant property taxes.
