‘NACF Calls for Expanding Tax Credit to Forestry Industry, Citing Public Values of Forests’
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‘NACF Calls for Expanding Tax Credit to Forestry Industry, Citing Public Values of Forests’
With improving reliability of indices on evaluation of public functions, such as GHG absorption & storage, conditions for expanding of tax credit to forestry industry are met

23(Sat), Sep, 2023

Chairman Choi Chang-ho of the National Forestry Cooperative Federation (NFCF). (Photo: NFCF)

The following are excerpts of a column contributed to a vernacular daily by Chairman Choi Chang-ho of the National Forestry Cooperative Federation (NFCF). 

Recently, ways of expanding tax credits for forest owners and people in the forestry industry to invigorate management of privately-owned forests have been hotly discussed. 

Demand for the revision of sunset laws on the provision of tax credits for people in the forestry industry, to be expired later this year, has mounted, and a consensus has been formed around the need to expand tax credits for the forestry industry, reflecting rational evaluations on the public values of forests. 

Privately-owned forests account for 65.3 percent of the nation’s total forest areas, so privately-owned forests need to be cultivated well to bring more benefits to the nation’s people. 

But figures, released by the National Institute of Forest Science (NIFS), showed that more than 57 percent of the owners of the relevant areas in Korea, are aged 60 or more, and 85 percent of the owners are small-sized with less than 3ha of mountain area, an indication of the stark situation of privately-owned mountains. 

The lumber yield, a key yardstick for the management of privately-owned forests, is not ideal due to low profitability with higher management costs. 

Given these hard conditions, the government’s ways of providing tax credits have been discussed so mountain owners can raise the values of forests by managing their mountains. 

Apart from the hard situation of mountain owners and people in the forestry industry, demand for expanding tax credits to the industry is rational based on the principle of tax equality and public functions of forests. 

Currently, tax credits are offered to the forestry industry, but its support is lower compared to the agricultural sector, a primary, similar industry. 

For example, people in the agricultural industry are exempted 100 percent from transferring income tax in returning for handing over land, whereas mountain owners are given a 50 percent transfer income tax reduction on only reserve forest lands out of the forestry areas. 

Farmers returning to farming villages are given a 50 percent reduction in farmland acquisition tax, but not anyone else returning to mountain areas. 

The number of raw materials and equipment qualified for oil tax reduction for the agricultural sector stands at 42, but the figure is just 10 in the forestry industry. 

Mountain owners, who are concurrently engaged in farming, feel it irrational over the gap of the tax credit between the farming and forestry segments. 

In particular, the rationale for providing tax support to the agricultural sector has multiple functions, such as for farming villages, reinvigorating the regional economy and persevering the environment and grain security. 

With the improving of the reliability of indices on the execution and evaluation of public functions, such as GHG absorption & storage, the provision of forest landscape, and the prevention of soil loss, conditions for expanding of tax credit to the forestry industry are met. 

An evaluation of forests’ public functions by NIFS estimated their value at 259 trillion won in 2020, an about 16.9 percent surge from 221 trillion won in 2018. 

Sunset laws on oil tax reductions for the forestry industry are expire this December. 

Forest owners note the gaps in tax credits between farming and forestry. 

Despite the harsh conditions, forest owners contribute to raising the public value of forests, but they are struggling with price rises, such as international crude oil and raw material and equipment price hikes. 

Now is the time for easing forest owners’ burden and improving people’s happiness using privately-owned forests by soliciting the government’s support, public concern and support. 

Executives and staffers of forest cooperatives across the nation will join forces to call for expanded tax credits for the forest industry by communicating the public value of forests based on the fair tax support with no gap between the farming and forest sectors. 

NFCF Chmn. Choi Meets with PPP Deputy Floor Leader to Discuss Promoting Forestry Industry

Chairman Choi Chang-ho of the National Forestry Cooperative Federation met with Lee Yang-soo, deputy floor leader of the ruling People Power Party (PPP), to discuss ways of promoting the development of the forestry industry at the National Assembly on July 25. 

NFCF Chairman Choi explained to PPP Deputy Floor Leader Lee forests’ public functions and suggested ways of developing the forestry industry. 

In particular, Chairman Choi recommended ways of offering money to people in the forestry industry and expanding financial services by amending laws to invigorate forestry financing. 

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