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Paying taxes by card popular, but fees draw ire

Oct 11,2017
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More Koreans are opting for the convenience of paying their taxes with credit cards, but the transaction fees imposed on them by card companies are causing a stir because of their inconsistency.

Last year, there were 2.4 million national tax payments made by credit card worth 42.4 trillion won ($37.3 billion), accounting for 16.8 percent of national tax revenue, according to figures released Monday by Rep. Park Myung-jae, an opposition lawmaker in the Liberty Korea Party who received the data from the National Tax Service ahead of an annual legislative audit.

The figures represent a significant improvement from 2009, when the system was first introduced and there were just 268,000 payments made by card totaling 224.6 billion won, a scant 0.1 percent of national tax revenue.

The amount of credit card payments last year is also double that of the previous year after the government lifted a cap on card payments, allowing companies to cover their corporate taxes with plastic.

The self-employed have also caught on to the payment method, finding it convenient when they are short on cash.

But taxpayers have also expressed dissatisfaction with transaction fees charged by credit card companies for paying national taxes. While 1 percent is charged for tax payments to the national government, those made to local governments, such as vehicle registration fees and property taxes, are not charged fees because of contracts they have signed with card companies.

Last year, taxpayers paid about 300 billion won in transaction fees, more than tenfold from 2013 when 26.2 billion won was collected.

For credit card companies, the tax payment system has proven to be a valuable source of revenue at a time when fees from brick-and-mortar transactions have been decreasing. To encourage more customers to use plastic, card companies have even been rolling out promotions like interest-free installment payments.

The inconsistency with which card companies charge taxpayers has sparked demand for fees to be waived altogether.

“Stores can’t demand their customers pay credit card transaction fees,” Representative Park said. “In that sense, the central government [in passing on the fees to taxpayers] is enjoying special perks without reason. A no-fee system should be applied for national taxes like in local taxes.”


BY JEONG JIN-WOO [kang.jinkyu@joongang.co.kr]