[2022 National Audit] Kakao Mobility at the Audit Hearing "Preparing for Late-Night Taxi Shortage in Line with Ministry of Land, Infrastructure and Transport's Intent"

[Image source=Yonhap News]

[Asia Economy Reporter Kang Nahum] Ahn Gyu-jin, Vice President and Head of Kakao Mobility Business Division, said regarding the late-night taxi call fee revenue sharing rate announced by the Ministry of Land, Infrastructure and Transport (MOLIT), "We are internally preparing to operate in accordance with the intent of the Ministry of Land." Earlier, MOLIT announced a plan to raise the late-night call fee from the existing 3,000 won to 5,000 won and to allow taxi drivers to take 90% of the call fee revenue.

On the 6th, Vice President Ahn appeared at the MOLIT audit held in the National Assembly Land, Infrastructure and Transport Committee meeting room. When Justice Party lawmaker Shim Sang-jung asked, "Is the 1 to 9 revenue sharing ratio an agreed matter with Kakao Mobility as well?" he responded accordingly.

Kakao Mobility has so far split the franchise taxi call fee 50-50 with taxi drivers. Currently, the mobility industry expects that if taxi drivers take 90% of the call fee, profitability will inevitably decline.

However, Vice President Ahn expressed agreement with MOLIT’s intent, saying, "The recent announcement from MOLIT is to encourage taxi drivers who had left during the COVID-19 period to return."

At this audit, Kakao Mobility’s excessive commission collection leading to 'revenue inflation' was once again brought up, following last year. Lee So-young, a lawmaker from the Democratic Party of Korea, pointed out, "Currently, KakaoT franchise taxi drivers pay 20% of their revenue as commission to Kakao Mobility and then receive back 15-17% under the name of advertising activity expenses," adding, "The tax declaration amount imposed on drivers is calculated as much as the commission paid to the company."

If a driver generates 1 million won in taxi operation revenue, the declared revenue is recorded as 1.15 million won. In this case, annual revenue exceeding 80 million won could cause the driver to be classified from a simplified taxpayer to a general taxpayer.

Lawmaker Lee criticized again, "Revenue is taxable, but many drivers either pay excessive taxes or refrain from operating at the end of the year fearing exceeding the threshold. The additional taxes drivers unwillingly pay and the year-end taxi chaos are damages caused by Kakao’s 'body inflation,' aren’t they?"

In response, Vice President Ahn explained, "The partnership contract for advertising activity payments is fundamentally different," and "Franchise commission is literally the portion collected by the franchise headquarters." He added, "The partnership contract is being prepared so that taxi drivers can have advertisements inside the taxi separately from driving, creating a program that generates revenue beyond just driving."

The so-called ‘customer whitelist’ controversy, where taxi drivers evaluate passengers, was also raised. Park Jeong-ha, a lawmaker from the People Power Party, criticized, "Kakao Mobility charges taxi drivers a certain commission to evaluate passengers. Do you intend to continue this service?"

Vice President Ahn responded, "Passengers evaluating drivers helps improve the boarding culture in its own way," but added, "After listening to customers’ feedback and interviewing drivers, we will quickly improve any parts that can be improved."