Home Fiscal Summary Fiscal Overview Overview of The Three Major National Finances

Overview of The Three Major National Finances

  • Public finance refers to all economic activities that the government engages in to procure, manage, and spend financing sources.

    The subjects that make up the national economy can be divided into households, businesses, and governments.
    The government conducts expenditure activities to provide public goods and public services based on tax revenues collected from households and businesses,
    Which economic activities in the government sector can be collectively expressed as finance.
    In other words, fiscal activity refers to the government's import and expenditure activities expressed in monetary units as economic activities carried out by the government.

    Specifically, the government will raise funds by collecting taxes (national and local taxes), charges, and contributions, selling assets (stocks, real estate, etc.), and issuing government bonds.
    The government spends money to play a role in the public sector, such as maintaining national defense · diplomacy · security, research and development, creating foundations for economic growth, and meeting the needs of education and social welfare.

Types of Public Finance

Depending on the operation method, there are (1)budgets (general account and special accounts), and (2)funds. Public finance can be categorized into budgets and funds. Budgets can be categorized into general account and special accounts.

Public finance can be categorized into budgets and funds. Budgets can be categorized into general and special accounting.

budgets

  • General Account

    Government accounting that serves as the basis for a national budget for general expenses based on general tax.

  • Special Accounts

    Special accounts for specific expenditures based on special fiscal sources that are installed according to relevant laws if the processing needed is different from general tax such as income and expenditure.

  • Financing for budgets is referred to as tax revenue and expenditure as tax expenditure.
  • The budgets that use the precious taxes of the people are formed according to strict rules set by the ‘Constitution’ and the ‘National Finance Act’.

Funds

If continued and stable funding is required for a certain finance project or flexible execution is required, installation/operation occurs according to relevant laws.

  • - Unlike budgets, fiscal sources comprise loans, charges, etc. and expenditure/revenue is linked for projects with specific projects.
  • (1) Changes within 30% of the major expenditure amounts are possible for financial funds, and (2) 20% for other funds without the need for a decision from the National Assembly.

Financial Structure

Depending on the operation entity, public finance can be classified into (1)central finance executed by the central government , (2)local finance operated by local governments and  (3)local educational finance of local education institutions (including offices).

Fiscal structure by operating entities

Central finance, Local finance:
Budgets (general account and special accounts) and funds.
Local educational finance:
Operated by local education institutions as special accounts for education installed/operated according to the Local Education Autonomy Act, separate from the general account of local governments.
  • National finance
    • Central Government finance
      • budget
        • General account
        • Special accounts
      • Fond
    • Local Government finance
      • budget
        • General account
        • Special accounts
      • Fond
    • Local education finance
      • Special accounting for education