South Korea's national tax revenue this year is projected to exceed the March supplementary budget estimate by more than 63 trillion won. Lee Hyoung-il, deputy prime minister and minister of finance and economy, said the government will "use the excess tax revenue to carry out market stabilization measures, including reducing the volume of government bond issuance."
According to the Ministry of Finance and Economy on the 30th, the government recently convened a tax revenue estimation committee meeting and finalized the revenue projection. Under the new estimate, national tax revenue for this year was revised up to 478.6 trillion won, an increase of 63.2 trillion won, or 15.2%, from the March supplementary budget. Corporate tax was projected at 136.4 trillion won, up 35 trillion won from the supplementary budget on the back of a semiconductor boom, while income tax was forecast at 152.4 trillion won, up 15.6 trillion won. Securities transaction tax was also revised up by 1.9 trillion won to 12.4 trillion won amid a stock market rally.
The government decided to use part of the excess revenue to reduce issuance of deficit-financing bonds. Lee held an expanded macroeconomic and fiscal-financial meeting at the Government Complex Seoul that day and said the government will "carry out market stabilization measures, including emergency buybacks and a reduction in bond issuance using part of the excess tax revenue, if the rise in treasury bond yields is excessive." He did not disclose specific figures. The government plans to maintain its expansionary fiscal stance in principle, but with high-interest-rate shocks emerging in the United States, Japan and the European Union, the extent to which it scales back future bond issuance is expected to affect the broader Korean economy. (See Pages 1 and 3 of this newspaper's Sept. 28 edition.)
