Cement Association Appeals for Withdrawal of Local Resource Facility Tax

"Direct Support for Areas Around Cement Factories"... Questions on Transparent Operation of Cement Tax by Metropolitan Local Governments
National Assembly Local Tax Law Amendment Bill, "Legislation Discouraging Corporate Motivation, Industry Fears Mutual Destruction" Backlash

Panoramic view of Hanil Cement Danyang Plant.
Photo by Korea Cement Association

[Asia Economy Reporter Kim Jong-hwa] The Cement Association appealed for the withdrawal of the regional resource facility tax (commonly known as the cement tax), which the National Assembly is pushing to legislate, calling it "legislation that dampens corporate motivation."

On the 6th, the Korea Cement Association released a statement titled "Cement Industry's Position on the Legislation of the Regional Resource Facility Tax for Cement," requesting, "As a local company, the cement industry will continue to make its best efforts for regional economic development and coexistence."

The regional resource facility tax is a proposed amendment to the Local Tax Act that adds cement production as a taxable subject and imposes a tax of 1,000 KRW per ton of cement produced. The bill was jointly proposed by Lee Gae-ho and 10 other members of the Democratic Party of Korea. Although the bill was submitted during the 20th National Assembly and automatically discarded, it has been revived and is under discussion again in the 21st National Assembly.

The association anticipates that if the amendment passes, the industry will have to pay an additional approximately 50.6 billion KRW annually in regional resource facility tax, which will severely deteriorate the business environment. Including the environmental costs currently borne by the industry, the total annual burden would increase to about 126 billion KRW.

The association reiterated its existing stance of directly establishing funds to support residents around cement plants rather than paying large taxes to metropolitan local governments with insufficient operational capacity. The association emphasized, "Starting with direct support of 25 billion KRW (500 KRW/t) to local communities, we will continue to expand and sustain a cooperative framework with local governments and residents."

In its statement, the association raised concerns about the transparency of the use of the regional resource facility tax collected by metropolitan local governments such as Gangwon and Chungbuk, which amount to a total of 50 billion KRW collected at the limestone mining stage, questioning whether these funds were used appropriately for the areas surrounding cement plants, as intended. This issue was also raised during the 20th National Assembly.

In fact, during the 20th National Assembly, the regional resource facility tax bill was automatically discarded amid debates over the cement industry's intention to expand direct support of about 25 billion KRW and concerns about the lax administrative capacity of metropolitan local governments managing the tax revenue.

The direct support proposed by the association excludes taxes allocated to metropolitan local governments such as Gangwon and Chungbuk, which are not directly related to the local governments where cement plants are located, and the amount proposed exceeds the actual amount allocated to the relevant local governments. The cement industry currently provides direct support exceeding 10 billion KRW annually to local communities, and this amount is expected to reach around 20 billion KRW this year.

The association stated, "Various costs that the cement industry directly supports for local development funds and local communities are transparently executed and appropriately used where needed," and suggested again, "If the purpose is to improve the environment around cement plants, it is desirable to form a fund management committee including local governments, residents, and civic groups to seek cooperative and developmental measures."

While expressing concern that imposing an annual tax burden of around 50 billion KRW through the regional resource facility tax ignores the industry's difficult business environment and could ultimately lead to the industry's mutual destruction, the association promised, "The cement industry will do its best to expand social contribution activities for the region in the future so that tangible benefits such as regional development and improvement of residents' quality of life can be felt firsthand."

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