Inchon container tax encounters resistance

While Inchon city intends to follow Pusan's lead and charge the city d
evelopment tax on containers effective January 1st, 2001, relevant ind
ustries strongly insisted on its abolition, with the Inchon Chamber of
Commerce & Industry (ICCI) at the forefront.
Proposals to get rid of the city development tax on containers are bas
ed on worries that logistic cost increases, local unemployment, decrea
sed incomes, deterioration of the Port of Inchon, and the weakening of
local counties' international competitiveness might be incurred by it
s implementation.
The city development tax on containers bill was passed in the National
Assembly as a Local Tax Law on October 20th, 1991, and set in the Inc
hon municipal ordinance. Imposing the tax has so far failed as its ena
ctment has been delayed until the end of this year by changing the ord
inance three times.
Cargo volumes at the Port of Inchon increased by 32.8 percent in 4 yea
rs, rising to 574,656 TEU in 1999 from 432,493 TEU in 1996. As the por
t, however, covered only 6 percent of total containers in Korea in 199
9, aggressive strategies would be necessary to enhance inbound and out
bound cargo volumes in the Seoul metropolitan area, said an official f
rom the ICCI.
The ICCI and relevant industries pointed out that if the city developm
ent tax were imposed on containers it would probably drive local compa
nies into hardship and they would lose their competitiveness in busine
ss. For instance, Inchon would often pay more money on logistics than
other cities because of heavy traffic jams in the metropolitan area an
d demurrage would result from a shortage of port facilities. To impose
the city development tax on containers might provoke a prolonged loca
l economy depression by accelerating local industries' difficulties.
The high cost-low efficiency system, such as high interest rates, high
wages, high land prices, high logistic costs, and low productivity, i
ndicate an immanent economic crisis. Government and industries said th
at they have done their best to overcome the system and to revive the
Korean economy.
In addition, there is only one local government, Pusan, that charges a
city development tax on containers at present. Kwangyang has abrogate
d the tax already while Masan has delayed its application and tried to
do away with it.