Card firms hamper full tax returns

By Choi Kyong-ae

Credit card companies have failed to fully report the details of customers’ card use for year-end tax settlements, further upsetting salaried workers already groaning over an ever-growing tax burden.

In January, four major card issuers — BC Card, Samsung Card, Shinhan Card and Hana Card — missed some data for about 2.89 million cardholders when the companies reported their customers’ card usage details for tax returns from the National Tax Service, the Financial Supervisory Service (FSS) said Monday.

“We found that the four card firms mistakenly omitted some card payment data for public transportation, purchases at traditional markets and others. The value reaches over 160 billion won ($148 million),” an FSS official said, asking not to be identified.

The companies separately confirmed their “mistakes,” which they said they immediately corrected by sending amended data on Monday to the tax agency. The four firms said they had also made apologies to customers who suffered from the mistakes by sending text messages to their mobile devices.

Last week, BC Card failed to categorize 1.7 million customers’ card use worth about 65 billion won on public transportation into the “card spending on public transportation” for higher tax returns.

Samsung Card and Hana Card omitted 400,000 customers’ card spending valued at 17 billion won and 500,000 customers’ card use worth 17 billion won, respectively, both on public transportation.

Shinhan Card failed to report 640 customers’ card use worth 24 million won at traditional markets, according to the companies.

The four companies have posted notices on their websites stating that they were sorry about the failure to report all the card spending data to the tax agency.

A Samsung Card spokeswoman said the company is also making efforts to notify customers if there are any omitted sums for year-end tax refunds for 2013 as well.

The FSS official said it is the matter to be resolved between the card companies and the tax agency. He urged the tax service and the card firms to “make a thorough review of the existing reporting system in order not to make similar mistakes again.”

“We will cooperate with the card companies to minimize any possible damages of the customers who are taxpayers,” Yang Dong-hoon, spokesman for the National Tax Service said.

The Park Geun-hye government initially vowed to realize welfare policies that could take up to 135 trillion won during her five-year term without raising taxes. Her term ends in February 2018.

But the government’s efforts to boost tax revenue by reducing spending and bringing the underground, or shadow, economy into the open for taxation did not work, analysts said.

Salaried workers have de facto been shouldering more tax, with their effective tax rate rising 0.46 percentage points from 2008 to 2013. It contrasts with the effective corporate tax rate, which fell 3.58 percent during the same period, according to the Korea Institute of Finance.