Bigger balances per debtor drive Korea's 2.5-fold rise in collectible tax arrears

The number of people behind on national tax rose from 864,107 in 2020 to 1,002,348 in June ^[5], an increase of 138,241, or 16% ^[13]. Over the same stretch the amount under collection rose 2.53 times, from 9.5284 trillion won to 24.1127 trillion won ^[4][14]. Spread across debtors, that is about 11.0 million won a head in 2020 ^[15] and about 24.1 million won in June ^[16]. The average balance rose about 2.2-fold ^[16].

The figures fit more than one explanation. Rep. Min Byoung-dug of the Democratic Party of Korea obtained the National Tax Service data, which the National Assembly released on the 11th ^[2], and he argues they show pandemic debt that never cleared. "There is a strong possibility that self-employed workers and small business owners whose businesses collapsed during the pandemic still have not escaped the burden of arrears," Min said ^[9]. A second explanation is concentration: a few large accounts go unpaid and pull up the average while the typical debtor's balance barely moves. A third is about how the series is defined. Arrears under collection are the amounts the agency considers recoverable and is pursuing ^[4]. So the series can rise when the agency judges more debt collectible, as well as when debtors fall further behind.

The sector figures lean toward Min. Lodging, restaurants and retail, the pandemic-hit trades in the release, owed 430.2 billion won of unpaid value-added tax between them in 2021 and 1,100.7 billion won in June ^[17]. That is a 2.56-fold rise, against 2.1-fold for total arrears ^[1]. Services, including other categories, went from 1.0807 trillion won to 2.4266 trillion won ^[7].

The release cannot date the debt. The 24.1 trillion won now under collection equals about 39% of the arrears newly incurred in 2020-2022 alone ^[19], but the stock holds debts from every year. "The fact that the National Tax Service does not manage data on arrears owed by the self-employed separately amounts to leaving a policy blind spot unaddressed," Min said ^[10].

We think the per-head figures favour Min's reading, with a caveat. When the stock grows 2.5-fold and the debtor count grows 16%, each debtor owes more on average. That happens either because old balances stayed and grew or because new delinquencies were larger. The first is the pattern Min describes. Concentration is the case that would overturn the view. If the median balance barely moved while a few large accounts lifted the average, the self-employed story loses its strongest evidence.