Gov¡¯t agencies divided over abolition of transportation tax

Government agencies are embroiled in a war of words over the issue of eliminating the transportation tax. According to government officials, the Ministry of Finance and Economy (MOFE) has set up a plan to abolish the transportation tax, a representative objective tax imposed on petroleum and diesel, and turn it into an excise tax from next January. However, the plan has hit a snag after the Ministry of Construction and Transportation (MOCT) strongly opposed the change. The two agencies are also at odds over whether or not there was an agreement for the plan.

Kim Jin-Pyo, head of the Tax Office at the MOFE, said Friday that his ministry recently reached an agreement with related government agencies such as the MOCT and the Ministry of Budget and Planning over a plan to abolish the transportation tax next January through the revision of a tax law this fall. He added that even if the tax is abolished, the price of petroleum and diesel would not go down because it will be turned into an excise tax.

Kim also said that the government is pushing for a plan to remove a special tax for farmers and fishermen, another objective tax, in January 2003 and by then the education tax will be left as the only state-imposed objective tax.

The MOFE has so far imposed the transportation tax in order to raise funds for infrastructure projects such as the subway system, high-speed railroad and airport. From next January on, the funds will come from the general state budget, officials said.

Kwon Soon-Hwal shkwon@donga.com