[News Terms] The Shadow Tax 'Burdengum' You Didn't Even Know You Were Paying

Departure payment, international exchange contribution, movie theater admission fee. These are items called payment, contribution, and charge respectively, but they all share the commonality of being grouped under ‘burden charges’.

Burden charges refer to money imposed to make individuals or companies related to a specific public interest project bear the costs incurred by that project. According to Article 2 of the Burden Charge Management Act, burden charges are defined as monetary payment obligations other than taxes imposed according to laws related to specific public interest projects, regardless of the provision of goods or services. This system was first introduced in 1961 to achieve specific administrative objectives and to efficiently allocate social costs.

Burden charges are similar to taxes in that they involve monetary payment obligations and provide funding for public interest projects. However, unlike taxes, which aim to generate general revenue for the state or public entities, burden charges are intended to cover the expenses of specific projects. Additionally, taxes are imposed uniformly on the general public, whereas burden charges are levied only on those with a special interest in the related project. Furthermore, burden charges differ from fees or usage charges, which are imposed only on individual usage acts, as burden charges involve sharing the costs required for the management of the project itself.

Types of burden charges include beneficiary charges, damage charges, and causative charges, and the authority to impose and collect them generally lies with the project entity, such as the state or public organizations.

Burden charges are hidden throughout our daily lives under the justification that they are used for public interest projects. Until now, we have paid charges not only when watching movies but also when buying cigarettes (National Health Promotion Burden Charge) or gum (waste burden charge). Burden charges are often called ‘shadow taxes’ because, like taxes, they involve monetary payment obligations but are often paid without people realizing it.

Despite the original purpose of improving the efficiency of social costs, there have been continuous criticisms that outdated burden charges impose burdens on citizens and businesses. This is because the economic situation now differs from the 1960s when the financial capacity was insufficient, and public interest project funding relied on burden charges. The Korea Chamber of Commerce and Industry last year pointed out that burden charges such as the Movie Development Fund, international exchange contribution, departure payment (Ministry of Foreign Affairs and Ministry of Culture, Sports and Tourism), mineral import and sales charges, and reconstruction burden charges lack proper purpose justification.

Accordingly, the government decided to reduce or abolish 12 burden charges, including the electricity burden charge and departure payment, starting July 1 to restructure unnecessarily collected burden charges. According to 13 partial amendments to enforcement decrees, including the ‘Partial Amendment to the Enforcement Decree of the Electric Utility Act’ deliberated and approved at the Cabinet meeting on the 28th, the rate of the electricity fund burden charge included in electricity bills will be gradually reduced by 1.0 percentage point from the current 3.7% to 2.7% by July next year. Also, the departure payment included in airline fares will be discounted by 4,000 won from 11,000 won to 7,000 won, and the exemption age will be raised from the current 2 years old to 12 years old. The automobile accident victim support burden charge included in car insurance premiums will be reduced from 1.0% to 0.5% of the compulsory insurance premium over three years. Additionally, the agricultural land preservation burden charge rate will be lowered for non-agricultural promotion areas, and the gum waste burden charge, which collected 1.8% of the sales price from gum manufacturers, will be abolished. The burden charges reduced through these enforcement decrees amount to about 1.5 trillion won annually.