Tax Revenues Surge 2.7 Times over 5 Years

The government's tax revenues surged 2.7 times over the last five years to a whopping W68.1 trillion (US$1=W1,195). Income tax increased 1.5 times over the same period to W47.2 trillion.

One windfall was from punitive real-estate taxes ostensibly aimed at discouraging property speculation. According to the Ministry of Economy and Finance on Sunday, real estate-related tax revenues totaled W6.1 trillion in 2021, up a staggering 4.7 times compared to 2016.

This was partly due to changes in the way it was calculated. The ratio of actual market price vs. declared value of a home to determine the tax rose from 80 percent to 95 percent since 2018, and the tax rate rose from two to six percent.

Capital gains taxes also surged 2.7 times to W36.7 trillion, while inheritance and donation tax revenues soared 2.8 times to W15 trillion. Inheritance and donation tax revenues also rose sharply as more and more people gave real estate to their children to avoid paying property and capital gains taxes.

Securities transaction tax revenues also increased sharply as people rushed to the stock market amid record-low interest rates on savings. The Korea Composite Stock Price Index rose from 2,220 points in 2020 to 3,111 points in 2021, resulting in the total transactions increasing 26.4 percent from W3,026 trillion to W3,825 trillion.

The proportion of asset-related taxes out of total tax revenues therefore rose from 16.3 percent in 2020 to 19.8 percent in 2021.