Seoul, South Korea's ratio of tax burden to the gross domestic product (GDP) will likely reach an all-time high of 19.6% next year on increased government spending, the Korean finance ministry said Tuesday.
Government spending has been on a steady rise for years in a way to buttress Asia's fourth-largest economy suffering from faltering exports and sluggish domestic demand.
For 2016, it mapped out a 398 trillion won budget, including a 10 trillion won supplementary budget, and came up with a 400.5 trillion won budget for 2017, surpassing the 400 trillion won level for the first time in its history, state news agency (Yonhap) reported.
At the same time, the country is expected to post a net 8.3 trillion won in tax revenue by the end of this year, considering that it collected an excessive 23.2 trillion won in taxes through October.
With the increase in government spending and tax revenue, the Ministry of Strategy and Finance said the national tax-to-GDP ratio will touch or top the earlier record of 18.9%, set in 2007, next year.
"On brisk tax collection, we see a record high in tax burden ratio," Deputy Finance Minister for tax and customs Choi Young-rok said in a briefing. "For the 2016 budget, the rate was 18.9% and it will gain an additional 0.5 or 0.6 percentage point, given the supplementary budget. And if we add provincial taxes collected, which will be compiled later, the figure would surpass the 19.4-19.5% range".
Source: Qatar News Agency