The South Korean government collected 19 trillion won ($16.6 billion) more taxes from January to May this year, compared to the same period a year ago, despite an economic slowdown, according to a monthly fiscal report by the Ministry of Strategy and Finance on Tuesday.

The government’s tax revenue amounted to 112.7 trillion won in the five months, up 19 trillion won from a year earlier, with its tax collection rate reaching 50.6 percent.


The report said that an increase in income tax filings by self-employed and in real estate transactions were attributable to its higher tax collection.

Also, the government was able to collect more corporate taxes as the private sector saw an improvement in earnings, while an increase in consumption led it to gain more value-added taxes, the ministry’s report added.

With total revenue reaching 179.8 trillion won on spending of 175.4 trillion won in the same period, the government had a fiscal surplus of 4.5 trillion won. Korea had a fiscal deficit of 9.7 trillion won in the same period last year.

The Finance Ministry recently said that it can afford to spend 10 trillion won more from its own coffers without having to issue debt, due to its increased tax revenue. Despite a slowdown, the government expects tax surplus of 9 trillion won this year. This would mark the first time since 2003 for the government to allocate more spending without debt financing.

The Finance Ministry announced last month that it will aggressively carry out expansionary fiscal policy and spend around 20 trillion won, including a supplementary budget of some 10 trillion won.

The Organization for Economic Cooperation and Development has recommended Asia’s fourth-largest economy to increase taxes to boost its social safety net system on expectations of growing social spending due to the aging population.

By Park Hyong-ki (hkp@heraldcorp.com)