"Communication Expense Income Deduction Results in Supporting Telecom Companies with National Taxpayer Money"

Income Tax Deductions Not Advisable for All Citizens
Support from Telecom Companies... Encourages Excessive Telecom Consumption
Criticism of Typical Telecom Populism Policy

[Asia Economy Reporter Koo Chae-eun] As the general election approaches, the ICT industry is also entering a full-scale competition over pledges, and criticism has been raised that the Liberty Korea Party's pledge of 'income deduction for communication expenses' is a typical populist pledge.

On the 16th, An Jeong-sang, Senior Policy Committee Member of the Democratic Party of Korea, pointed out, "The income deduction for communication expenses is criticized for resulting in support for mobile carriers using taxpayers' money." He added, "The three major mobile carriers can raise fees by the amount of the income deduction benefit, which encourages excessive communication consumption."

Senior Committee Member An pointed out, "If tax revenue decreases, the resources for welfare investment will be reduced, ultimately harming the general public." He mentioned that the income deduction for communication expenses was a policy once promoted by the Korea Communications Commission in 2012 but was abandoned. He said, "At that time, a policy was promoted to provide income deductions within an annual limit of 1.2 million KRW per worker by combining communication and broadcasting fees, but due to many criticisms, the income deduction could not be implemented."

However, Senior Committee Member An said, "Proposing income deductions for communication expenses for all users means that income deductions should also be applied to public utility fees such as electricity, water, and gas usage fees." He added, "If it is to be done, it would be more desirable to consider filial piety (孝) income deductions or value-added tax exemptions targeted at households supporting elderly parents aged 65 or older, rather than for the general public."

He also pointed out problems with the distribution structure innovation pledge, which includes the introduction of a complete device self-supply system. Senior Committee Member An said, "The complete device self-supply system divides opinions among manufacturers, mobile carriers, and general retailers, and opinions on reducing communication fees and device purchase costs are mixed." He evaluated, "Considering the domestic mobile market environment, a 'limited complete device self-supply system' aimed at coexistence between large and small businesses and protection of local markets is more reasonable."

Regarding the abolition of the rate approval system, he said, "It is desirable to evaluate the competition situation in the communication market, user welfare, and other circumstances and prepare a legislative solution. Currently, SK Telecom supports abolishing the approval system, while KT, LG Uplus, and civic groups support maintaining it."