Korean Newspaper Association Urges Amendment of 'Government Advertising Act' That Only Fattens Media Foundation

"A 10% commission rate is absurd"

Statement issued jointly by publishers of all 52 member companies

[Asia Economy Reporter Shim Nayoung] The Korea Newspaper Association urged the Ministry of Culture, Sports and Tourism on the 10th through a joint statement signed by publishers of all 52 member companies to "amend the 'Government Advertising Act' that only fattens the Korea Press Foundation (hereinafter the Press Foundation)." The Ministry of Culture, Sports and Tourism is the main government agency responsible for government advertising.

The Newspaper Association demanded four points: ▲lower the current 10% government advertising agency commission rate to 3%, ▲operate so that the requesting government advertising agencies bear the actual commission cost, ▲use all commission revenue except for the essential expenses of the agency (Press Foundation) for press promotion, and ▲correct the organizational system of the foundation so that it can fulfill a role commensurate with its name, 'Korea Press Foundation,' and the commission revenue.

In the statement, the Newspaper Association criticized, "After operating the 'Act on Advertisement by Government Agencies and Public Corporations (Government Advertising Act)' enacted in December 2018 for a full year, it is difficult to find the legislative intent, and it has become a means to only fatten the Press Foundation," adding, "The Press Foundation collects a 10% commission in the form of a 'pass-through tax' without any significant role."

The statement continued, "There have long been criticisms that 'a 10% pass-through tax rate is absurd,' but these were ignored without any discussion during the legislative process," and pointed out, "It was natural that the commission rate became a target of lawmakers' criticism during last year's National Assembly audit."

The statement also pointed out, "The foundation's commission revenue, which was 53.4 billion won in 2016, surged sharply to 71.1 billion won in 2018 when the Government Advertising Act was introduced, 81.9 billion won in 2019, and 84.0 billion won in 2020," adding, "However, even if media support by the Press Foundation in 2020 is generously estimated at 12.9 billion won, it accounts for only about 15.4% of the commission revenue, which is a clear case of putting the cart before the horse."

Huh Seungho, Secretary General of the Newspaper Association, explained that ▲the 10% pass-through tax rate is excessive by any standard, ▲although the law stipulates that advertisers should bear this cost, in practice advertisers deduct the 10% commission in advance before placing advertisements, resulting in almost the entire amount being passed on and borne by media companies, ▲the Press Foundation, possibly conscious of management evaluations, focuses its commission revenue on its own projects rather than press support, and ▲especially because there was strong objection at the recent Newspaper Association board meeting.

This content was produced with the assistance of AI translation services.