South Korea bucks global trend with lower departure tax, raising tourism funding fears

South Korea cut its departure levy from 10,000 won to 7,000 won

Major tourism nations are raising departure taxes

Stable funding seen as essential for competitiveness

Government pushing to raise levy to 20,000 won next year

Participants at the forum "Rationalizing the Departure Levy: Why Now?" held Monday at the National Assembly Members' Office Building [Korea Tourism Organization]

Concerns are mounting that South Korea is losing its tourism competitiveness by cutting its departure levy at a time when most major countries are raising theirs. With the government's goal of attracting 30 million foreign tourists by 2030 seen as unachievable without a stable funding base, calls are growing to bring the departure levy in line with global standards.

A forum titled "Rationalizing the Departure Levy: Why Now?" was held Monday at the National Assembly Members' Office Building, co-hosted by the office of Democratic Party of Korea lawmaker Jo Gye-won and the Ministry of Culture, Sports and Tourism, and co-organized by the Korea Tourism Organization, the Korea Tourism Association and the Korea Tourism Academic Society. The forum was convened to gather views from industry and academia on meeting the national policy goals of attracting 30 million foreign tourists and revitalizing regional tourism.

The forum venue for "Rationalizing the Departure Levy: Why Now?" [Korea Tourism Organization]

Of South Korea's total tourism budget of 1.475 trillion won (about $961 million) this year, 1.1976 trillion won — or 81.2 percent — goes to the Tourism Promotion and Development Fund. The departure levy accounts for about 30 percent of that fund's revenue, making it a critical source of financing.

The government's decision in July 2024 to cut the departure levy from 10,000 won to 7,000 won — and to expand the exemption to children under 12 — has resulted in an annual fund shortfall of between 130 billion won and 140 billion won. Revenue from the levy fell 21.8 percent year-on-year to 262.4 billion won in 2025, while the per-person amount collected plunged from around 8,000 won in 2019 to around 5,400 won in 2025.

Yun Hye-jin, professor of tourism development and management at Kyonggi University

Yun Hye-jin, a professor of tourism development and management at Kyonggi University who chaired the forum, said major tourism powerhouses such as Japan, Australia and the United Kingdom are aggressively raising departure taxes and reinvesting the proceeds in tourism infrastructure and environmental conservation funds. "The decline in departure levy revenue is not only a fiscal crisis — it could become a key factor weakening the competitiveness of the future tourism industry," she said.

Major countries have in fact been steadily raising their departure taxes to expand tourism funding. Japan will raise its international tourist tax to 3,000 yen (about $19) starting in July, while Australia charges A$70 as of 2024. The United Kingdom's Air Passenger Duty rises with flight distance and applies higher rates to premium cabin seats; as of 2025, the short-haul rate stands at 28 pounds and the long-haul rate reaches 216 pounds.

Bali, Indonesia, introduced a tourist tax of 150,000 rupiah per foreign visitor in February 2024. Thailand raised its departure tax by about 50 percent on June 20, bringing it to the equivalent of around 54,000 won, while Taiwan and Hong Kong maintain departure levies of roughly 20,000 to 30,000 won. By comparison, South Korea's departure levy amounts to just 9.3 percent of Australia's and 25 percent of Japan's.

Ryu Gwang-hun, researcher at the Korea Culture and Tourism Institute [Korea Tourism Organization]

Ryu Gwang-hun, a researcher at the Korea Culture and Tourism Institute, said the departure levy had been frozen for 27 years since 1997 before being cut by 30 percent in 2024, even as other major countries have continued to raise theirs. "With tourism demand surging this year, this is the moment when tourism-related funding for infrastructure and product development needs to grow by at least 20 percent," he said.

The fund shortfall is already being felt on the ground. The Korea Hotel Association said the reduced fund has forced cutbacks in training and workforce development programs for hotel workers. Association President Yoo Yong-jong said policy financing is essential for the hotel industry given its high upfront investment costs, and called for the departure levy to be raised to strengthen infrastructure.

The blow is particularly severe given the structure of the tourism sector, where 90 percent of businesses have annual sales of 1 billion won or less and fewer than 10 employees. Korea Tourism Association Senior Vice President Hwang Jun-seok said funding must be expanded at a reasonable level, taking into account the burden on travelers and the impact on the industry.

Programs backed by the tourism fund have delivered measurable results. The "Korea Accommodation Sale Festa" drew 2.3 million new travelers to regional destinations last year, generating local spending, while a worker vacation support program produced an economic ripple effect more than nine times the value of the subsidies provided.

Park Seong-hyeok, president of the Korea Tourism Organization [Korea Tourism Organization]

Korea Tourism Organization President Park Seong-hyeok said the organization has used the Tourism Promotion and Development Fund to intensively develop high-value markets including medical tourism, wellness and MICE, and to pursue aggressive marketing built around Korean culture. "The departure levy is the seed money that underpins the entire tourism industry — from overseas promotion and marketing to support for domestic businesses — so expanding the fund's revenue base will be the starting point for South Korea's leap to becoming a tourism powerhouse," he said.

Some participants argued that reforms to how the fund is managed must accompany any increase in its size. Jo Gwang-ik, senior vice president of the Korea Tourism Academic Society, said the levy is paid by all departing travelers but the benefits flow mainly to business loans. He called for the law to clearly restrict how the funds may be used and for indirect support — such as vouchers and vacation subsidies — to be expanded so that the benefits reach those who pay the levy.

Lee Gyeong-su, chairman of the Korea Tourism Association [Korea Tourism Organization]

The Korea Tourism Association proposed three priorities for how any additional revenue should be used: investment in regional tourism innovation, strengthening travel safety for citizens, and improving tourism readiness. Association Chairman Lee Gyeong-su said what matters most is not how much the levy is raised, but ensuring the public understands why an increase is necessary and can see where the money goes. "Since it is the public who bears the departure levy, it is important to secure public trust by transparently disclosing how the funds are used and what results they produce," he said.

Jo Gye-won, lawmaker of the Democratic Party of Korea [Korea Tourism Organization]

The government and the National Assembly signaled a shared commitment to drafting legislation to address the fiscal shortfall. Kang Dong-jin, director of tourism policy at the Ministry of Culture, Sports and Tourism, said the ministry would work to resolve the problem after gathering views that rationalizing the departure levy is necessary to grow into a global tourism powerhouse. Democratic Party lawmaker Jo Gye-won said funding is ultimately what is needed to secure the competitiveness of South Korea's tourism industry and improve service quality. "I will swiftly draw up an improvement plan and introduce a bill to correct the fiscal reality that has deteriorated since the departure levy was cut," Jo said.

A concrete government-level plan to raise the levy has already taken shape. The Ministry of Planning and Budget announced in March that it would pursue a plan to more than double the departure levy from the current 7,000 won per person to 20,000 won as part of next year's budget guidelines. If the increase takes effect next year as planned, it would mark the first rise since the departure levy system was introduced in 1997 — and a return to normalcy just two and a half years after the levy was lowered from 10,000 won to 7,000 won in 2024.

terry@heraldcorp.com