National Assembly seeks to pass anti-market bills amid tax revenue plunge

Aug 01, 2024, 09:59 am

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South Korea’s national tax revenue amounted to 168.6 trillion won (approx. $124.8 billion) in the first half of this year, marking a significant decrease of 10 trillion won, compared to the same period last year./ Source: Yonhap News

AsiaToday reporter Lee Choong-jae

South Korea’s tax revenue shortfall is expected to reach around 10 trillion won (US$7.22 billion) in the first half of this year, while the opposition-led National Assembly is introducing a flurry of bills to increase spending and add pressure on companies, the main pillars of national taxes. Concerns are growing that the financial slump could grow further if actual bills are implemented.

The government collected 168.6 trillion won of taxes over the January-June period, down 5.6 percent from the same period last year, according to the data from the Ministry of Economy and Finance revealed on Wednesday.

The country’s tax revenue shrank 10 trillion from a year earlier in the first half, due mainly to the falling collection of corporate tax and comprehensive real estate tax. Corporate tax collection sank 34.4 percent on-year to 30.7 trillion won in the first half due to poor performances by local businesses last year. The “virtuous cycle” in which cooperate growth leads to increased tax revenue has been cut off, and the national finances are running low.

However, the National Assembly is striving to enact anti-market bills regardless of such a situation. The opposition parties, including the main opposition Democratic Party (DP), plans to hold a plenary session on Thursday at the earliest to propose the so-called yellow envelope bill, the revision to the Trade Union and Labor Relations Adjustment Act, and the legislation providing cash handouts of 250,000 won (US$184) to the entire population.

If the opposition-led National Assembly passes the livelihood recovery payout bill, which stipulates a cash handout ranging between 250,000 and 350,000 won, in regional gift certificates, the government should spend nearly 12.81 trillion won. Experts are concerned that such bill is a temporary measure for the livelihood recovery, considering that the country’s tax revenues of 56 trillion won disappeared last year.

The yellow envelope bill calls for strengthening the responsibility of subcontracted workers and expanding the scope of industrial action, raising concerns that the industry’s competitiveness will be shaken by inducing indiscriminate strikes.

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