Rep. Kim Seung-soo of the People Power Party said Monday that he had sponsored an amendment to the Restriction of Special Taxation Act that would extend the fuel tax exemption period for coastal passenger ferries.
The amendment was introduced to continue support for coastal passenger ferries, an essential means of transportation for residents of island regions that connect islands with the mainland, amid an ongoing oil supply crisis stemming from the continued U.S.-Iran war. Kim described the bill as "the third livelihood legislation introduced to support the economy for ordinary citizens."
The amendment extends the sunset deadline for provisions that reduce value-added tax and other levies on petroleum products used by coastal passenger vessels. The current Restriction of Special Taxation Act includes special provisions exempting petroleum products supplied to coastal passenger vessels from various taxes, including value-added tax, individual consumption tax, and education tax. With the tax exemption period set to expire on December 31 this year, calls for an extension have been raised primarily within the industry.
According to the National Assembly Budget Office, the tax exemption for petroleum products used by coastal passenger ferries provides approximately 40 billion won ($29 million) in annual benefits to the industry. Indirect tax exemptions amounted to 39.2 billion won in 2024 and 39.7 billion won in 2025. A total of 40.6 billion won in benefits is expected this year. (Reductions in the driving portion of the automobile tax, a local tax, are excluded.)
Despite such support, passenger numbers on coastal ferries have not recovered to pre-COVID-19 levels. Looking at coastal route passenger numbers over the past 10 years, the figure peaked at 16.91 million in 2017 but fell sharply to 14.63 million in 2018 as the pandemic took hold. The number dropped further to 10.6 million in 2020. Even after the COVID-19 threat subsided, passenger numbers have not returned to previous levels, reaching 13.27 million in 2023 and 12.63 million in 2024. As a result, the number of coastal passenger ferry and ferry service operators decreased from 114 in 2019 to 104 in 2024.
"The special provision is absolutely necessary to ease the management burden on the coastal passenger ferry industry, which plays an important role in connecting island regions with the mainland," Kim said.
