Ending Tax Breaks

[Anchor Lead]

The government has decided to halt the tax benefits granted to Korean Air and Asiana Airlines under investigation for their owner families' abusive conduct and illegal acts. Once an amendment bill passes the National Assembly, the two carriers will have to pay over 30 billion won in additional taxes annually, starting next year.

[Pkg]

When the abusive conduct of the owner families of the major airliners made headlines almost every day. A petition was posted on the Cheong Wa Dae website, demanding an end to local tax exemptions for the beleaguered carriers. Three months later, the government decided to terminate such benefits granted to Korean Air and Asiana Airlines. For nearly 3 decades, these conglomerates paid no acquisition tax and just half of the property tax for their aircraft purchases. This law underwent one revision, but the 60% exemption on acquisition tax and 50% on property tax clauses were left in place. The government has been giving tax privileges to these airliners for more than 30 years to boost international competitiveness. But now the local tax law is about to be amended. Once the bill passes parliament, Korean Air stands to lose 28.9 billion won and Asiana five billion won in tax benefits annually. In contrast, low-cost carriers will continue to receive tax exemptions. Four years ago, the government had tabled a revision bill to cut the exemption benefits, but the National Assembly had deferred the decision, allowing the two carriers to keep enjoying huge tax gains. Meanwhile, Korean Air and Asiana Airlines opted to keep their eyes on the development and haven't issued any official statements about the termination of tax benefits.