(ATTN: RECASTS throughout to highlight excess tax revenue)
By Kim Soo-yeon
SEOUL, Jan. 13 (Yonhap) -- South Korea's excess tax revenue for last year is estimated to have exceeded the government's earlier forecast by some 8 trillion won (US$6.7 billion) on the back of rises in asset prices and the economic recovery.
The government collected 323.4 trillion won in taxes in the first 11 months of last year, up 55.6 trillion won from the previous year, according to the finance ministry.
In the cited period, excess tax revenue came to 9.1 trillion won, and given that tax revenue for December rose more than 17.7 trillion won on-year, the yearly excess tax revenue is estimated to reach at least 26.8 trillion won.
This is up some 8 trillion won from the ministry's November forecast of 19 trillion won. Finalized figures for excess tax revenue will be unveiled next month.
"As the economic recovery gained momentum amid robust exports and rises in asset prices last year, the amount of excess tax revenue could top the government's earlier forecast," a ministry official said.
Tax revenue has increased as the collection from corporate taxes and value-added taxes rose in line with the economic recovery.
Capital gains taxes increased amid rises in asset prices, and revenue from income taxes also rose as the number of employed people soared due to a recovery in the job market.
With larger-than-expected excess tax revenue, the government is expected to be under pressure by the political sector to draw up another round of an extra budget to support pandemic-hit merchants.
Ahead of the March presidential election, Lee Jae-myung, the presidential candidate of the ruling Democratic Party (DP), called for the need to draw up an extra budget of at least 25 trillion won to support affected merchants.
Earlier in the day, President Moon Jae-in ordered his officials to "swiftly" draw up measures to ease economic pain facing the self-employed by utilizing excess tax revenue.
The DP said the government is preparing a proposal to create another round of an extra budget and support pandemic-hit merchants.
Finance Minister Hong Nam-ki previously opposed the creation of another extra budget early in the new year. But he recently left open the possibility that the government may review it by taking into account virus situations and state finance conditions.
Many small merchants have been suffering business losses as the government has extended tighter antivirus measures to curb the latest spike in COVID-19 cases.
South Korea drew up two rounds of supplementary budgets totaling some 50 trillion won last year to provide tailored support to small merchants and cash handouts to people in the bottom 88 percent income bracket.
This year's national budget stands at a record 607.7 trillion won.
To create another extra budget in the first quarter, the ministry may have to sell government bonds.
In the January-November period, the government's total income, including tax revenue, came to 523.9 trillion won, up 86.1 trillion won from the previous year.
The country's gross expenditures grew 45.2 trillion won on-year to 546.3 trillion won as the government ramped up spending to cope with the fallout of the pandemic.
As a result, the country posted a fiscal deficit of 22.4 trillion won in the 11-month period, smaller than a shortfall of 63.3 trillion won the previous year.
The managed fiscal balance, another key gauge of fiscal soundness calculated on a stricter term, logged a deficit of 77 trillion won in the first 11 months. It is calculated after excluding the balance of social safety funds.
The ministry said if the trends continue, the government's fiscal deficit for 2021 is expected to be smaller than its earlier projection of 90.3 trillion won.
The central government debt tentatively amounted to 939.1 trillion won as of end-December, up from 819.2 trillion won at the end of 2020.
The government earlier said the 2021 national debt is expected to reach 965.3 trillion won, an amount equivalent to 47.3 percent of the gross domestic product.
The national debt is expected to reach 1,064.4 trillion won this year, marking the first time that it would exceed the 1,000 trillion-won mark, according to the ministry's estimate.