Invest1 publisher3 min readPublished Updated
Stock-trading taxes supplied 14.9 trillion won of Korea's 41.4 trillion won revenue gain
The Ministry of Planning and Budget credits bigger SK hynix and Samsung bonuses for the largest single line in a five-year-low deficit, though it never splits that gain, and central government debt grew 86.1 trillion won anyway.
The Investor · Invest desk
What happened
- National tax revenue reached 274 trillion won in January to July, up 41.4 trillion won on the year, according to the September monthly fiscal report from the Ministry of Planning and Budget.
- The managed fiscal balance showed a deficit of 64.8 trillion won, 22 trillion won narrower than a year earlier and the smallest since 2021, when it was 56.9 trillion won.
- Treasury bond issuance totalled 162.3 trillion won through August, or 72.6 per cent of this year's issuance ceiling, after 21.2 trillion won sold in August alone.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- exposure Two of the five itemised revenue lines move with KOSPI turnover and part of a third with chip-maker bonus pools, so a quiet trading year and a flat bonus round would subtract from receipts with no change in tax law.
- constraint The remaining issuance headroom allows about 15.3 trillion won a month for the last four months against the 20.3 trillion won averaged since January, so an autumn spending package either fits inside that or the ceiling has to move.
- cost Carrying this year's new bonds at August's 4.10 per cent average is about 6.7 trillion won of interest a year, which consumes roughly a sixth of the revenue gain that produced the five-year-low deficit.
- decision About 47 per cent of the extra revenue went straight back out as spending, so next year's budget is being negotiated from a higher outlay base than the deficit headline suggests.
The two fastest-growing lines in the report both run on share trading. Securities transaction tax receipts rose 6.4 trillion won, helped by higher trading values and by this year's restoration of the tax rate [6]. The special rural development tax, which tracks KOSPI trading values, rose 8.5 trillion won [7]. Together that is 14.9 trillion won, about 36 per cent of the 41.4 trillion won increase, and more than income tax contributed [1][2]. Corporate tax, the line where the chip makers' own profits would show up, rose 4.4 trillion won [5]. The five increases the report itemises add to 39.6 trillion won of the 41.4 trillion, leaving 1.8 trillion unexplained [3].
The ministry gives two causes for the income tax gain and splits neither. It names higher wage income tax from larger performance bonuses at companies including SK hynix and Samsung Electronics, and higher capital gains tax from more property transactions [3]. So the share of the windfall attributable to chip payrolls is not in the document. The securities transaction tax has the same ambiguity: part of the 6.4 trillion won came from turnover and part from a rate restoration that recurs whether turnover holds or not [6].
Borrowing did not slow. Central government debt was 1,354.2 trillion won at the end of July, up 15.7 trillion won in the month and 86.1 trillion won since December [12]. Treasury bonds outstanding account for all of that, rising 86.1 trillion won to 1,244.4 trillion won [13]. The debt added this year is about 2.1 times the revenue gained [4].
Issuance is ahead of the calendar. The 162.3 trillion won sold through August is 72.6 per cent of the year's ceiling at the two-thirds mark, 5.9 points ahead of a straight line [14][9]. That implies a ceiling near 223.6 trillion won and roughly 61.3 trillion won left for September to December [5]. August money cost 4.10 per cent on average, against 4.07 per cent in July [15].
The consolidated deficit of 20.1 trillion won looks smaller because it includes social security funds [10]. The managed balance, which excludes them and is seen as the better gauge of the underlying position, is 64.8 trillion won [11][17]. The 44.7 trillion won difference is what the funds contributed [8].
The five-year low rests on two things that reset every January: a bonus pool and a year of trading turnover [11]. A flat bonus round at the two chip makers takes money out of the wage income tax line with no change in law, and a quieter market does the same to two more lines. The case against that reading sits in the base, where value-added tax rose 8.1 trillion won on consumption and imports and corporate tax rose 4.4 trillion won as earnings improved [4][5], neither of which depends on a single payroll or a single year's turnover. What would settle it is a split of the 12.2 trillion won income tax gain between bonuses and property, and the September report does not give one [3].
What to watch
- Whether the full year lands on the 415.4 trillion won revenue projection, with 66.0 per cent booked at seven months.
- Any fourth-quarter revision to this year's treasury bond issuance ceiling.
- The average funding rate in September and after, since every basis point applies to a growing stock of new bonds.