The Constitutional Court has ruled that the current provision in the Individual Consumption Tax Act, which imposes an individual consumption tax of 12,000 KRW per visitor at membership golf courses, does not violate the Constitution.
Previously, in 2012, the Constitutional Court also upheld the constitutionality of the same provision. Although the number of people enjoying golf has increased since then, the Court judged that golf has not yet become popular enough to warrant overturning the precedent.
According to the legal community on the 4th, the Constitutional Court dismissed the constitutional complaint filed by golf course operator Mr. A against Article 1, Paragraph 3, Subparagraph 4 of the Individual Consumption Tax Act with a decision of six justices in favor of constitutionality and three against.
Mr. A, who operates a membership golf course in Gapyeong, Gyeonggi Province, reported and paid a total tax of approximately 93.6 million KRW on April 25, 2018, including 58.512 million KRW in individual consumption tax, 17.5536 million KRW in education tax, and 17.5536 million KRW in special rural tax for the first quarter of 2018 related to golf course admissions.
On November 9 of the same year, Mr. A filed a correction request with the Namyangju Tax Office, claiming that the legal basis for the individual consumption tax he paid was unconstitutional and requesting a reduction of the full amount of the individual consumption tax, education tax, and special rural tax previously paid.
However, the Namyangju Tax Office rejected the correction request, stating that the taxes were lawfully paid in accordance with Articles 1 and 3 of the Individual Consumption Tax Act, and Mr. A filed a lawsuit at the Uijeongbu District Court seeking cancellation of the tax office’s rejection.
During the lawsuit, Mr. A requested the court to refer the constitutional review of the relevant provisions of the Individual Consumption Tax Act that formed the basis of taxation, but when this was not accepted, he directly filed a constitutional complaint with the Constitutional Court.
Article 1 (Taxable Items and Tax Rates), Paragraph 3 of the Individual Consumption Tax Act lists the places where individual consumption tax is imposed on "admission acts," including ▲racecourses (1,000 KRW per person per admission, 2,000 KRW at off-track betting sites), ▲bicycle racing and motorboat racing tracks (400 KRW per person per admission, 800 KRW at off-track betting sites), ▲places with slot machines (10,000 KRW per person per admission), ▲golf courses (12,000 KRW per person per admission), and ▲casinos (50,000 KRW per person per admission, 6,300 KRW for casinos in closed mining areas, 2,000 KRW for foreigners).
Mr. A argued in his constitutional complaint that Article 1, Paragraph 3, Subparagraph 4 of the Individual Consumption Tax Act, which imposes an individual consumption tax of 12,000 KRW per person per admission to golf courses, infringes on property rights and violates the principle of tax equality.
However, the majority of the Constitutional Court justices found that this provision does not violate the Constitution.
The Court first cited its 2012 decision on the same provision, which found it constitutional as it did not violate the principle of prohibition of excess or the principle of tax equality.
At that time, the Court stated, "The imposition of individual consumption tax on golf course admissions aims to promote tax fairness by levying taxes commensurate with the ability to pay for luxury consumption," and added, "Golf is still a high-end sport that many citizens find financially burdensome to enjoy, and the tax rate of 12,000 KRW per person per admission is not considered excessive."
Regarding the petitioner’s claim that it is unfair to impose individual consumption tax only on golf courses while exempting other high-end sports facilities such as equestrian centers, the Court said, "Imposing individual consumption tax on items with insufficient demand may result in collection costs exceeding tax revenue, so excluding them from taxation may be desirable. Currently, it is difficult to consider that there is sufficient demand to impose individual consumption tax on equestrian centers," and "The legislature’s decision to impose individual consumption tax only on golf course admissions cannot be seen as an arbitrary measure exceeding the limits of policy-making authority, nor as unreasonable discrimination against golf course admissions."
The Constitutional Court found that although some circumstances have changed since the previous ruling, these changes do not warrant overturning the precedent.
The Court pointed out, "Since the precedent decision, the golf population has steadily increased and golf courses have expanded, but it is still difficult to say that golf course usage has completely lost its character as luxury consumption or become a popular consumption activity in terms of fees, membership prices, accessibility, and public perception. It is also necessary to consider that while individual golf course fees have continuously risen, the individual consumption tax rate has remained fixed at 12,000 KRW since 1998."
Additionally, the Court cited the government's actual policies and tax measures, such as the "Golf Course Utilization Rationalization and Golf Industry Innovation Plan" announced in January 2022, which actively encourage and support the development and popularization of golf, while imposing individual consumption tax only on membership and non-membership golf courses that maintain high prices and exclusivity, as grounds for constitutionality.
The Enforcement Decree of the Individual Consumption Tax Act specifically excludes golf courses supervised by the Minister of National Defense and public golf courses designated by the Minister of Culture, Sports and Tourism from taxable golf courses.
The Court stated, "Despite the continuous increase in the total number of golf courses, the number of golf courses reporting and paying individual consumption tax decreased from about 200 in 2012 to about 160 in 2023," and concluded, "Considering all the above, there is no change in circumstances or necessity that requires a different judgment from the precedent in this case. Therefore, the provision under review cannot be considered to violate property rights by exceeding the principle of prohibition of excess."
The Court also found that the provision in question does not violate the principle of tax equality.
The Court noted, "Although the equestrian population has increased compared to the time of the precedent ruling, the estimated total revenue from equestrian activities was about 100 billion KRW as of 2022, which is still insufficient to impose individual consumption tax compared to the golf course operation revenue exceeding 6 trillion KRW."
Furthermore, the petitioner argued that the provision violates the principle of equality by treating differently without reasonable grounds, since individual consumption tax on admission acts is imposed only on gambling venues such as racecourses, excluding golf courses. However, this is merely because the taxation method shares the commonality of taxing admission acts, and the taxation of gambling venues and golf course admissions differ in purpose and tax rates. Therefore, simply being stipulated in the same article does not mean treating different things equally.
On the other hand, Chief Justice Lee Jong-seok and Justices Lee Young-jin and Kim Hyung-doo dissented, arguing that the provision violates the principle of prohibition of excess by infringing property rights and discriminates against golf courses without reasonable grounds compared to other sports facilities, thus violating the Constitution. They called for a constitutional inconsistency decision with provisional application until new legislation is enacted.
These justices stated, "Golf is no longer a high-priced recreational activity enjoyed only by a privileged few but a popular sport and healthy physical activity," and "It is difficult to consider golf as a luxury consumption subject to individual consumption tax."
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