This study emphasizes the need for accurate tax revenue forecasts, as these forecasts enable policymakers to identify the fiscal balance of their government, find the necessary financial means to support social and economic development, and promote the growth of their national economy.
Total economic forecasts and tax revenue estimates form important parts of fiscal policymaking in the Korean government. Reliable fiscal forecasts require rational estimates of future tax revenue. These estimates and forecasts are central to the creation of all economic policies. The task of ensuring accuracy and reliability in tax revenue forecasts is therefore vital to budget preparation and economic planning.
Accurate tax revenue forecasts involve a series of related undertakings, including: the development and trial of a revenue forecast model, detailed analyses of various items of direct and indirect taxes, and refining the forecast model further by using the tax sources and rates as the explicatory variables of tax revenue. Through this process, we can analyze and review trends in the domestic tax revenue as well as its structure, while also defining the forecast method on the basis of the functions of the variables involved. The statistics provided by the National Tax Service can be used to identify the coefficients of these explicatory variables, and use the coefficients to verify the resulting estimates. The intermediary variables identified in the process can further refine the forecast of the annual tax revenue for the years from 1977 to 1981.
According to this formula, the total tax revenue that the Korean government earned in 1974 totaled KRW 718 billion, KRW 313.1 billion of which came from direct taxes and KRW 387.7 billion from indirect taxes. In 1975, the total amount of tax revenue increased by more than KRW 200 billion to KRW 991.6 billion. Only KRW 357.7 billion of this, however, came from direct taxes, while the amount of indirect taxes increased significantly to KRW 570.4 billion. In 1978, the total amount of tax revenue is expected to grow to KRW 1.8126 trillion, KRW 672.5 billion of which will be from direct taxes and KRW 1.0999 trillion from indirect taxes. By 1981, the total tax revenue will amount to KRW 3.0607 trillion, of which KRW 1.121 trillion would be from direct taxes and KRW 1.871 trillion indirect. All in all, the trend of increase will be more manifest in indirect taxes than in direct taxes.
The analysis and estimates reveal that the amount of tax revenue is sensitive to the activity of the overall national economy, and is therefore in a functional relationship with the national income. Korean policymakers will need to continue their search for a more reliable tax revenue forecast model that conforms better to the structural characteristics of both the Korean economy and the Korean tax system, in order to ensure reliable forecasts and planning on tax revenue and national income. Policymakers also need to reduce the dependency on indirect taxes, strive to redistribute income more equitably among Koreans through more effective taxes, and encourage greater professionalism and expertise in tax administration in general.
내국세의 세목별 세수예측방법(Method for forecasting tax revenue of different domestic tax items)
서울 : 한국개발연구원
|Series Title; No||연구보고서 / 제75-20권|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KDI; KDI School|