Assessment and Implications of Korea’s Tax Revenue: Comparison with Japan
Kim Seong Tae, Fellow at KDI
■ The recent downward turn in Korea’s tax revenue has hindered efforts to achieve stable fiscal management.
○ Tax revenue has remained below the budgetary target for the past three years, eroding confidence in the government’s fiscal policy.
○ Additionally, concerns are heightening over a possible acceleration in the deterioration of fiscal soundness, as in the case of Japan in the 1990s.
■ This study intends to compare Korea’s tax revenue shortage with Japan’s past experiences and draw upon implications on future tax revenue conditions through an analysis of tax components.
○ Korea’s recent predicament resembles Japan’s economic situation two decades ago. Japan’s experiences of tax revenue shortages from the 1990s and resultant deterioration of fiscal soundness, will likely serve as useful policy implications for Korea’s long-term fiscal policy plans.
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