National tax revenue is rising faster than expected this year, fueling expectations that the tax surplus will exceed the government’s initial forecast. Economists and budget analysts, however, warn that repeated forecasting errors could undermine confidence in fiscal management.
According to the Ministry of Economy and Finance on the 26th, national tax revenue in January and February totaled 71 trillion won, up 10 trillion won (16.5%) from a year earlier. By category, income tax rose 2.4 trillion won, value-added tax increased 4.1 trillion won, and the securities transaction tax climbed 1.2 trillion won.
Revenue is also coming in earlier than usual. As of February, the collection rate versus the annual budget stood at 18.2%, 1.4 percentage points above the five-year average of 16.8%.
The government previously projected a tax surplus of about 25.2 trillion won compared with the main budget and used it to fund a supplementary budget. With talk of additional gains in some items, including housing holding taxes, some observers say the surplus could be larger.
The concern is that tax revenue volatility has widened sharply in recent years. Surpluses reached 61.3 trillion won in 2021 and 52.6 trillion won in 2022, but were followed by shortfalls of 56.4 trillion won in 2023, 30.8 trillion won in 2024 and 8.5 trillion won in 2025.
Such swings are seen as weakening predictability and transparency in fiscal operations, especially when errors run into the tens of trillions of won, reducing the effectiveness of medium- and long-term fiscal plans. Underestimating revenue can increase incentives to draft supplementary budgets, while overestimating can lead to spending cuts or additional bond issuance, potentially hurting fiscal stability.
The government has emphasized that the latest supplementary budget is “bond-free” because it uses surplus revenue. Critics note that if the entire surplus is spent, less will remain as a year-end surplus that could have been used to repay government debt, producing an effect similar to issuing additional bonds in terms of fiscal soundness.
The National Assembly Budget Office said both under- and over-budgeting revenue causes inefficiency and unnecessary administrative costs. It said the case, in which about 25 trillion won in revenue error emerged just three months after the fiscal year began, calls for a broader review of the tax revenue forecasting system rather than being treated as a simple miscalculation.
Analysts attribute the volatility to a tax structure heavily dependent on the business cycle and asset markets. Major taxes such as corporate tax and capital gains tax are sensitive to economic conditions and asset prices, amplifying swings. Limits in forecasting methods — including repeated conservative or overly optimistic errors when incorporating economic outlooks — are also cited.
Experts say institutional improvements are needed to better manage volatility, including more sophisticated forecasting models and a framework that improves predictability in medium- and long-term fiscal planning.
Kim Jeong-sik, an emeritus professor of economics at Yonsei University, said accurate revenue forecasts require credible growth projections and consideration of policy variables, including tax law changes and real estate-related capital gains and holding taxes. “Because this process is also tied to the National Assembly, there are aspects that make forecasting difficult,” he said.
* This article has been translated by AI.
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