South Korea will likely collect 10 trillion won (US$8.9 billion) less in taxes during the first half than a year earlier, raising worries that the government might need to draft a second extra budget plan to fill the revenue gap, data
showed Sunday.

According to the data submitted by the National Tax Service (NTS) to lawmakers, the government had collected 82.13 trillion won worth of taxes during the January-May period, which is about 9 trillion won less than the same period a year earlier.

The tax collection rate also remains quite low.

As of end-May, the NTS had collected 41.3 percent of 199 trillion won, its target for this year. It is lower than the 45.8 percent tallied in 2009 when the government drafted an extra budget to make up for revenue shortfalls at the time.

"If this trend continues, the tax revenue shortfalls will likely grow to 10 trillion won by the end of the first half, and they could rise further to 20 trillion won by end-2013," said An Min-suk, a lawmaker of the main opposition Democratic United Party.

The prolonged economic slowdown hit hard corporate tax and value-added tax income.

The data showed that the corporate tax revenue decline had reached 4.34 trillion won as of end-May, which is a 17.9 percent fall from the same period a year earlier. The value-added tax income also had dropped 7.2 percent or 1.83 trillion won over the same period.

Some experts worry that the government might need to prepare a second extra budget to make up for the revenue shortfalls.

In May, the National Assembly approved a 17.3 trillion won supplementary budget aimed at filling a hole in the government's revenue and securing money to boost the overall sluggish economy.   

The government remained reserved about the idea of pushing for a second extra budget, expecting the economy will likely bounce back in the second half, which could result in improving the tax collecting conditions.

"We expect that the economy will improve somewhat during the second half and the tax shortfalls will not be as serious as the first half," a high-ranking finance ministry official said on condition of anonymity.

Last month, the government revised up its 2013 growth outlook to 2.7 percent from the 2.3 percent it predicted in March, pinning hopes that such stimulus measures as the already drafted extra budget would rejuvenate investment and private consumption.

(Yonhap News)