The tax authorities are switching to emergency mode as this year’s tax revenue is increasingly likely to miss the target by an unexpectedly large margin.

According to data presented by the National Tax Service, tax revenue during the first five months of the year totaled 82.13 trillion won, a shocking fall of as much as 9 trillion won from the same period a year ago.

If the trend continues, the shortfall is expected to expand to 10 trillion won by the end of the first half and 20 trillion won by the end of the year.

This means the government’s tax income for this year could drop to as low as 172 trillion won from the 192 trillion won it collected last year. The government’s revenue target for this year is 199 trillion won.

The main culprit for the disappointing outcome is the prolonged economic slowdown, which sapped corporate and value-added tax incomes.

The NTS said it collected 19.9 trillion won from corporations during the January-May period, a disheartening drop of 18 percent from the previous year. Sluggish exports and stagnant domestic consumption weighed heavily on corporate sales.

On top of that, the corporate tax rate was effectively lowered last year by the introduction of a middle income bracket: For companies whose taxable income ranges between 200 million won and 20 billion won, the tax rate has been cut from 22 percent to 20 percent.

The income from value-added tax also dropped 7.2 percent over the same period, reflecting lackluster household consumption due to mounting debt.

As tax collection is falling far short of expectations, creating another supplementary budget looks increasingly inevitable.

In May, the government drew up a 17.3-trillion-won additional budget to plug revenue shortfalls and stimulate the economy.

Yet officials rule out the possibility of creating a second extra budget. They are betting that the revenue deficit would dwindle in the second half as the economic recovery will pick up the pace, boosting tax income.

Last month, the government raised its 2013 growth projection to 2.7 percent from the previous forecast of 2.3 percent, citing such stimulus measures as the extra budget and the central bank’s 0.25 percentage point rate cut in May.

This optimism, however, may prove wishful thinking. Many private research institutes have warned that the government might be looking at the economy through rose-tinted glasses.

Experts note that if the government manages to reduce the revenue shortfall to around 5 trillion won, it won’t have to create another extra budget as it would be able to tap into the budget carryover, which averages 5 trillion won each year.

However, should the shortfall exceed that level, the government would be forced to look to the Assembly for a second supplementary budget. Given the present economic situation, it faces an uphill battle to reduce the revenue shortfall to that level.

What worries us is that the revenue shortage does not appear to be a one-off problem. Officials need to scrutinize the situation more closely and take bold measures to stimulate corporate investment. The best way to increase tax revenue is to accelerate economic growth, which in turn requires active corporate investment.