The government carried out a revision of revenue to reflect the expected shortfall in tax revenue for this year in advance in the budget proposal. The total amount is 10.3 trillion won. This is due to the corporate tax and value-added taxes, which significantly influence total revenue, being collected less than expected through April, and the extension of fuel tax cuts until the end of August making a decrease in tax revenue unavoidable. Unlike the Yoon Suk-yeol administration, which responded to the revenue shortfall by reallocating surplus funds, this approach has been positively assessed as a 'practical method.'
On the 19th, the government confirmed the scale of the second supplementary budget at 30.5 trillion won. Of this, 20.2 trillion won is allocated for increased expenditures to stimulate the economy and stabilize people's livelihoods, while the remaining 10.3 trillion won is designated for revenue adjustments.
This revenue adjustment is the third largest in history. In April 2009, a supplementary budget for overcoming the global financial crisis was organized with 11.4142 trillion won, and in July 2020, a supplementary budget for overcoming the COVID-19 crisis included 11.4414 trillion won for revenue adjustment.
Looking at the detailed items, this revenue adjustment includes ▲ Corporate tax -4.7 trillion won ▲ Value-added taxes -4.3 trillion won ▲ Transportation tax -1.1 trillion won ▲ Special consumption tax -900 billion won ▲ Education tax -300 billion won ▲ Inheritance tax +900 billion won, among others.
The corporate tax recorded 35.8 trillion won, which is 13 trillion won more than the previous year until April, but the progress rate against the annual target remains at 40.6%. Since most corporations completed their payments by March, it is judged that there is little room for revenue expansion going forward.
Value-added taxes also reflected the impact of political instability and economic uncertainty, which dampened private consumption. Additionally, tax reductions on fuel (until the end of August) and individual consumption tax cuts on passenger cars contributed to a drop of about 2.3 trillion won in tax revenue. The government originally planned for the fuel tax cuts to end this year, but extended the measure in response to the potential spike in international oil prices due to the Iran-Israel conflict.
A government official noted, 'Past governments that did not adjust their revenues faced severe conflicts with the National Assembly, incurring social costs as a result.' They explained, 'We deemed it necessary to clearly explain the revenue shortfall to the public, the National Assembly, and the press, and we determined that (adjusting revenues) is a normal way to manage finances.'
Earlier, the Yoon Suk-yeol administration plugged the gap by drawing funds from the Public Capital Management Fund and the Foreign Exchange Stabilization Fund, or delaying payments from other funds as significant tax revenue shortfalls occurred in 2023 and 2024. They also accessed funds from the Industrial Accident Compensation Insurance Fund and the Housing & Urban Fund, which is created from the contributions paid by the public for housing savings.
Experts agreed that this revenue adjustment is a desirable decision. Kim Sang-bong, an economics professor at Hansung University, said, 'It is important to accurately inform about national finances rather than resorting to loopholes,' and he positively assessed the government’s decision.
Heo Jun-young, a professor of economics at Sogang University, also stated, 'Revenue adjustment is a practical method concerning revenue shortfalls.' However, he added, 'The adjustment itself may lead to government bond issuance in the short term, which could push up market interest rates, potentially dampening the medium- to long-term effects of government policy.'