Driven by increases in corporate tax and earned income tax, last year's national tax revenue came in 1.8 trillion won above the projection made when the government drafted the supplementary budget. This reflects that the forecast was marked down by about 10 trillion won at the time due to concerns about a revenue shortfall. However, compared with the original main-budget forecast set by the previous administration, collections fell short by 8.5 trillion won, leading some to say it was effectively ‘three consecutive years of revenue shortfalls’.

On the 10th, the Finance and Economy Ministry released ‘Results of closing for total revenue·total expenditure for fiscal year 2025’ and ‘Annual status of national tax revenue for 2025’.

National tax revenue last year was 373.9 trillion won, up 37.4 trillion won from a year earlier. With a boom in semiconductors improving corporate results, corporate tax was 22.1 trillion won higher year on year (35.3 percent), and income tax totaled 130.5 trillion won, up 13 trillion won (11.1 percent). In particular, earned income tax increased by 7.4 trillion won due to higher bonuses. A boom in overseas stocks lifted capital gains tax (+3.2 trillion won), and increased KOSPI trading value boosted the special rural development tax (+2.2 trillion won) as well.

National tax revenue was 1.8 trillion won more than the projection presented when the government introduced the supplementary budget last July. On the books, this meant large shortfalls like 2023 (-56.4 trillion won) and 2024 (-30.8 trillion won) were avoided.

However, relative to the previous administration original main-budget target, about 8.5 trillion won less was collected. Depending on the benchmark, this can also be seen as ‘three consecutive years of revenue shortfalls’.

A Finance and Economy Ministry official said, “Even though a revenue shortfall was anticipated, keeping the initially finalized budget over the past two years (2023∼2024) had abnormal aspects,” and added, “Through the supplementary budget, we corrected the parts where the initial forecast was wrong and normalized operations.” The thrust is that, because the Yoon Suk Yeol administration rectified mis-forecasting via the supplementary budget, it is appropriate to use the supplementary projection as the standard.

Including non-tax revenue, total revenue was 597.9 trillion won, up 62 trillion won year on year. Total expenditure, on an execution basis, was 591 trillion won. The execution rate of the expenditure budget was 97.7 percent, the highest in five years since 2020 (98.1 percent). The ministry said this reflected an active fiscal stance by the government.

The amount of unspent funds, that is, unused appropriations, was 10 trillion won last year, the lowest in five years, less than half of the 20.1 trillion won a year earlier. During the 2023·2024 revenue shortfalls, the government deliberately reduced outlays, which had greatly increased the unused amount, but it declined again last year.

The consolidated surplus, calculated as total revenue minus total expenditure and carryovers, was 3.2 trillion won. The consolidated surplus is strongly akin to ‘spare money’ for the government. However, the general account portion that can in practice be used as a funding source for a supplementary budget was around 100 billion won, the ministry said.

This year, the upward trend in tax revenue also appears likely to continue. A semiconductor boom has sharply lifted corporate earnings at firms such as Samsung Electronics and SK Hynix, and the domestic stock market remains on the upswing. Although the government is drawing a line, depending on the results of corporate tax filings in March, the possibility of a supplementary budget of about 10 to 20 trillion won is being raised cautiously.

Kim Hyun-dong, a professor in the Department of Business Administration at Paichai University, said, “The main budget forecast was an estimate by the previous administration that was somewhat optimistic about revenue, and the new administration revised such projections to reflect reality through the supplementary budget,” and added, “This year the revenue trend looks likely to outperform expectations, but it seems premature to consider a supplementary budget based only on first-quarter results.”