Issue Shrinking tax base and the restructuring of public finances

Summary

Korea is among the countries ageing and depopulating fastest, with the working-age population already declining since its 2020 peak and total population expected to shrink in earnest from the late 2020s. The survey argues that this demographic shift goes beyond a population problem to become a structural threat to fiscal sustainability. Because income and consumption taxes rest on work and spending, fewer workers and consumers translate directly into lower tax revenue, even as pensions, health insurance and long-term care push spending up. This double squeeze of falling revenue and rising expenditure accelerates the growth of national debt and makes medium-term fiscal soundness hard to secure with existing practices. The panel therefore sees a comprehensive overhaul of the fiscal structure, including more efficient government programmes and reprioritised spending, as unavoidable.