Late Payment Surcharges on Wide-Area Transportation Facility Contribution Fees Must Be Paid Even When Refund Grounds Arise

[Suwon Ilbo=Park No-hun Reporter] Late payment surcharges on 'wide-area transportation facility contribution fees' legally assessed by Gyeonggi Province and 31 cities and counties in the province must be paid even when refund grounds arise due to reasons such as changes to project plans.

Gyeonggi Province announced on the 21st that through active administrative efforts including sustained consultations with the Ministry of Land, Infrastructure and Transport for fair operation of the wide-area transportation facility contribution fee system, it recently obtained such authoritative interpretation and will begin full implementation this month.

'Wide-area transportation facility contribution fees' are charges imposed on urban and residential development project implementers etc., based on the "Special Act on Metropolitan Area Wide-Area Transportation Management" and other laws, to secure financial resources necessary for construction and improvement of wide-area transportation facilities such as metropolitan railways, metropolitan roads, and transfer parking facilities within metropolitan areas.

Depending on the scale and type of development projects, provincial governors and city/county mayors, who are the project approval authorities, levy charges within 60 days from the date of approval. Development project implementers must pay the contribution fee within one year from the assessment date, and a 3% 'late payment surcharge' must be paid if payment is not made within the deadline.

However, if the relevant project plan is reduced, changed, or cancelled, the initially assessed contribution fee is recalculated and the notice is changed or a refund is issued.

The issue was the 'late payment surcharge' incurred due to delay in payment of contribution fees. Previously, according to 2012 Ministry of Land, Infrastructure and Transport guidelines and a 1986 Supreme Court precedent, when such refund grounds arose, the late payment surcharge was also changed or refunded. However, this has been pointed out as being unfair to equity as it creates no distinction from businesses that paid faithfully without defaulting on the contribution fee.

In particular, following Governor Lee Jae-myeong's governing philosophy for the 7th term of "ensuring that those who break the law do not benefit, and those who follow the law do not suffer losses," the province actively sought countermeasures and discovered a similar 2018 Supreme Court precedent on refunds of infrastructure facility contribution fee surcharges (Supreme Court '18.6.28 2016Du 50990).

At the time, the Supreme Court ruled that surcharges are of the nature of 'compensation for delay' for non-performance of payment obligations, and thus legitimate assessment of contribution fee surcharges have no refund obligation.

Based on the relevant precedent, the province held consultations with the Ministry of Land, Infrastructure and Transport and was finally able to obtain an authoritative interpretation stating: "Even when refund grounds arise, in cases of legitimately and properly assessed contribution fees, there is no need to change or refund already assessed and paid late payment surcharges."

Similar to the 2018 precedent, surcharges are of the nature of compensation for delay for non-performance of payment obligations, so if the initial assessment was legitimate and the administrative agency bears no responsibility for the project implementer's project plan changes or cancellations, surcharges must be paid without fail.

After further review of specific application targets and timing, the province plans to begin handling contribution fee surcharge matters in full accordance with the changed authoritative interpretation starting in July this year.

Accordingly, the province's contribution fee revenue is expected to increase somewhat, including 1.13 billion won for 4 cases currently under review and pending processing, and an expected annual increase of approximately 4.44 billion won in tax revenue is anticipated. Increased funds will be used for expanding wide-area transportation facilities to enhance residents' transportation convenience, such as metropolitan railway and road projects and transfer parking lot construction.

A province official stated, "This is an example of Gyeonggi Province's effort changing the Ministry of Land, Infrastructure and Transport's authoritative interpretation, and if it expands nationwide in the future, it will contribute to enhancing the public's transportation convenience," adding "We will continue to ensure that those who faithfully perform their payment obligations are not disadvantaged and that defaulters do not gain unreasonable benefits."