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This computerized image illustrates an increase in tax revenue. (Yonhap) |
South Korea's chief economic policymaker said Friday the government is reviewing another extra budget with larger tax revenue in a bid to help support vulnerable people hit hard by the pandemic.
Minister Hong Nam-ki said the country will not sell more government bonds to finance the extra budget as it is expected to collect more tax revenue this year amid an economic recovery.
"The government will focus its policy efforts on helping restore the job market and achieve an inclusive growth," Hong said at a meeting with experts from economic institutions and investment banks.
He said the supplementary budget, if created, will be used to accelerate the COVID-19 vaccine rollout, support vulnerable groups and assist the government's plan to bolster domestic demand and job recovery.
Talk of another extra budget initially emerged from the ruling party after President Moon Jae-in said last week the country needs to leave the door open for additional fiscal support.
This year's tax revenue is estimated at more than 300 trillion won ($269 billion), up around 17 trillion won from the government's earlier forecast of 282.7 trillion won, according to government and parliamentary officials.
This, if realized, would also mark an increase of more than 15 trillion won from 285.5 trillion won in tax revenue collected last year.
In the first quarter, the country collected 88.5 trillion won, up 19 trillion won from a year.
Anticipation for larger tax revenue comes as capital gains tax income will likely increase amid a boom in the housing and stock markets. Corporate tax income is also expected to rise as firms have logged robust earnings amid an economic recovery.
The South Korean economy is on a recovery track on robust exports of chips and autos. The Bank of Korea (BOK) last week revised up its 2021 growth outlook for Asia's fourth-largest economy to 4 percent from its earlier estimate of 3 percent.
South Korea created an extra budget of 14.9 trillion won in March to finance the 20.7 trillion-won relief aid for smaller merchants and vulnerable people hit hard by the pandemic.
Since last year, the country has drawn up five rounds of extra budgets totaling 82 trillion won to tackle the economic fallout of the COVID-19 pandemic.
The ruling Democratic Party (DP) is seeking to provide additional stimulus checks to all households as early as the upcoming summer vacation season in a bid to booster consumption.
Another extra budget may amount to more than 30 trillion won if the government decides to go ahead with a universal emergency support scheme.
But the finance ministry has been opposed to universal payment of emergency funds, citing growing debt burdens.
The country offered 14.3 trillion won in one-off emergency cash handouts to all households in May last year. It has so far provided three rounds of targeted support to smaller merchants and vulnerable groups.
With the latest supplementary budget, the country's government debt is expected to reach 965.9 trillion won this year. The debt-to-GDP ratio will likely reach 48.2 percent.
Last year, the country's national debt grew by the largest-ever amount of 123.7 trillion won to a record high of 846.9 trillion won.
South Korea may face further debt burdens as some lawmakers are reviewing a bill designed to provide state compensation to smaller merchants and the self-employed who have suffered losses incurred by the pandemic. (Yonhap)
