Historic Tax Reductions Announced

The Ministry of Economy and Finance has projected an unprecedented tax reduction of 78 trillion won for this year, marking a significant 9.2% increase from last year's 71.4 trillion won. This announcement, made by Jeong Jeong-hoon, director general of tax policy, sets a new record in the nation's tax expenditure history.

Exceeding Legal Limits Raises Eyebrows

With a projected tax reduction rate of 15.9%, slightly above the legal limit of 15.6%, concerns about a potential revenue shortfall for the third consecutive year are growing. The sluggish recovery of tax revenue, coupled with expanding tax expenditures, underscores the challenges ahead.

Fiscal Sustainability Under Scrutiny

Anticipated total national tax revenue of 412.2 trillion won is shadowed by debates over the sustainability of current fiscal policies, given the increasing tax reductions and unresolved revenue uncertainties.

Strategic Evaluations to Strengthen Management

In response, the ministry plans to conduct in-depth evaluations of 27 tax exemptions this year, aiming to eliminate or redesign unnecessary systems. Key items under review include the Special Tax Reduction for Small and Medium Enterprises and the Integrated Employment Tax Credit, among others.

Call for Systematic Management and Policy Shift

As tax reductions rise amidst sluggish revenue recovery, there's a pressing need for systematic management of these expenditures and a policy shift to ensure fiscal soundness.