Bill Proposed to Exempt National Tax Card Payment Fees... Card Industry Says "No Profit Left"

Representative Yang Jeongsuk Introduces Bill to Exempt National Tax Credit Card Payment Fees
Card Industry: "National Tax Fee Revenue Negative"

[Asia Economy Reporter Ki Ha-young] The credit card payment fee exemption bill for national taxes has been proposed in the National Assembly, causing anxiety in the card industry. This is because another bill to lower the fee rate, a major source of revenue, may be introduced ahead of the recalculation of card merchant fee rates this year.

According to the National Assembly and industry sources on the 26th, independent lawmaker Yang Jeong-suk recently took the lead in proposing a partial amendment to the Specialized Credit Finance Business Act, which aims to exempt fees for credit card payment agency services for national taxes. The intention is to reduce the burden on taxpayers by legally stipulating the exemption of payment agency fees not only for local taxes but also for national taxes. According to current law, when taxpayers pay national taxes by credit card, they must pay a payment agency fee equivalent to 0.8% of the payment amount (0.5% for check cards). In contrast, for local taxes, local governments sign contracts with card companies and use a credit provision method where the tax payment amount is managed by the card companies, replacing the fee, so taxpayers do not pay fees.

According to data on national tax credit card payments submitted by the National Tax Service to lawmaker Yang, the payment amount over the past five years (2016?2020) was 99.0752 trillion KRW. Even applying the 0.5% check card payment agency fee rate, it is explained that about 495.3 billion KRW in fees have been paid. Lawmaker Yang emphasized, "National taxes should also be exempted from payment agency fees like local taxes to reduce the household burden on economically struggling taxpayers due to COVID-19."

Long-standing Differences Over Fee Burden for National Tax Card Payments

The payment agency fee for card payments has been controversial since the introduction of the national tax credit card payment system in October 2008. While card payments increased convenience, the core issue was who should bear the fee burden. The government has explained that taxpayers should bear it as interest on a loan for fulfilling their tax obligations. Issues of tax burden equity with cash payers were also raised. However, to ease taxpayer burden, the payment agency fee rate has been continuously lowered. The fee rate, which was 1.5% in 2008, dropped to 1.2% (2010), 1.0% (2012), and 0.8% (2016).

The card industry has expressed concerns about the proposed bill. An industry official said, "The current national tax credit card payment agency fee rate is 0.8%, which is the fee level applied to small merchants," adding, "In fact, it is not profitable and is operated as a service." There is also skepticism about applying the credit provision method used for local taxes to national taxes. Even operating funds for up to 40 days in a low-interest environment is insufficient to cover the costs incurred by providing card payment services.

Another industry official said, "In countries like the United States and the United Kingdom, taxpayers pay higher fees when using card payments than in Korea," and expressed concern that "if the national tax payment agency fee is exempted, equity issues will arise in other public charges sectors such as the four major social insurance premiums, customs duties, and fines, which also use payment agency fee methods."

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