On June 27th Seoul won’t only have a price hike for public transport but a new fare system is going to be introduced. The new fare system includes a new calculation method for long-distance rides, free usage for elderly foreign residents and a discount for early birds.
Changes of Standard Fares
The basic fare is going up by around 20%. We gave a complete overview of the increased prices here in the announcement of new public transport fares for Seoul. For an adult who uses a transport card the fare is going to rise between 150 and 450 KRW, depending on the transport type (comparison of old and new basic fare with transportation card):
Subway: 1,050 KRW => 1,250 KRW
Blue and green buses: 1,050 KRW => 1,200 KRW
Maeul bus: 750 KRW => 900 KRW
Yellow bus: 850KRW => 1,100 KRW
Red Bus: 1,850KRW => 2,300 KRW
M-Bus: 2,000-2,700 KRW => 2,400-3,100 KRW
Night-bus: 1,850 KRW => 2,150 KRW
Back in April, Seoul proposed to raise the fares for children and school students as well. After public consultation and feedback the city decided to not increase the fares for them. However, if a school student (age between 13 and 19 years) pays by cash, he has to pay the same amount as an adult.
Additional Charges per Distance
Subway users had to pay an additional 100 KRW for every 5 km between a distance of 10 km and 40 km. The surcharge grew to 100 for every 10 km after a total travel distance of 40 km. Now the threshold is changed to 50 km and after 50 km a surcharge is paid every 8 km. So until a distance of 40 km the additional charge is the same as before but as soon as you reach 50 km and more, you will experience a higher surcharge to the basic fare than before. Here is a summary:
10-40㎞ : 100 KRW every 5 km => 10-50 km: 100 KRW every 5 km
After 40㎞: 100 KRW every 10 km => after 50 km: 100 KRW every 8 km
Free Rides for Foreign Elderly
Until now, only Korean elderly enjoyed the benefit of free subway rides. With the new system also foreigners, who are 65 years and older and have a F-5 visa (permanent residence visa), are given the benefit to use the subway for free. In Seoul there are 2,525 people who could use this benefit. The free transportation card is called “senior pass” (시니어패스) and applications for that card can be done at community centers.
Discount for Early Commuters
Now, let me introduce the most important feature of the new system: If you tap your transport card before 6:30 am, then you can receive a 20% discount on the basic fare. The discount is only given to transport card users. It’s interesting that the discount is also given to children and school students even though their fare wasn’t raised. Early commuters are going to pay less than before the reform for all transport methods except for the yellow bus. The idea behind this concept is to reduce the amount of passengers during the morning peak hours (7 to 9 am).
Since years I wanted to have such a system for Korea. Buses and trains are over capacity in the morning. The situation is really severe and dangerous. My hope was that the discount would be higher or even that Seoul would offer a completely free ride. Free? Now you might think that I’m crazy but there is a very successful example where the free ride system works perfectly: Singapore.
Free Rides in Singapore
Introduced in 2013, Singapore is providing free rides on their metro through their “Free Pre-Peak Travel” measure. Any commuter who finishes their journey before 7:45 am on weekdays doesn’t pay anything for the metro ride. The measure is very popular and it got extended year by year. Just recently, it was extended until June 2016. Besides a free ride, commuters who exit a station between 7:45 and 8 am receives a discount to the train fare.
Of course, Seoul isn’t Singapore and Seoul’s public transport system is much larger than Singapore’s metro system. Still, I believe that the non-measurable benefits would be huge. We’ll observe the development and how transit users react to the fare increase as well as to the new fare system.
Sources: New Fare System | LTA’s Free Pre-Peak Travel
It’s never happy news when subway fares increase. Much better options are to fund mass transportation through things like small transactions on stock trades, taxes on incomes over USD 1,000,000 per year, etc. It shouldn’t be the little guy who has to bear the burden.
That said, Seoul still has the best mass transit system in the world for the money, hands down. And even with the fare increases, the prices are still amazingly low for the quality of the system. So, while I lament that the ultra-rich aren’t funding the system as they should, I can’t fault the government here for doing what it has to to keep the system running at the high quality it currently is until the rich develop their morality enough to put in their fair share.
I’m curious what my monthly pass, which is currently W46.400, will increase to. It’s so nice now to just put a W50,000 bill in the machine once a month and be done with it. It would be a bummer if it went over W50,000…
Thanks for keeping us up to date on this, bad news though it may be.
James, that’s quite the rant. Korea already has a graduated income tax rate, and rates themselves are very similar to the U.S. so it’s not exactly a tax haven. (In fact, ironically Singapore income tax rates, especially for high earners, are much lower.)
BTW Korea already has the highest stock-transaction tax in the world (tax on sale of stocks). It’s called 거래세 and there’s more about it here:
http://www.imf.org/external/pubs/ft/wp/2011/wp1154.pdf
http://www.wowtv.co.kr/newscenter/news/view.asp?bcode=T30002000&wowcode=W001&artid=A201407230350&compcode=WO
I recommend looking elsewhere (besides income tax or stock tax) to look for missing budget revenue. I would start with tax evasion, especially by small businesses/self-employed individuals but even some mid-sized businesses as well. (Corporate income tax and VAT evasion).
See the chart in the below article for some estimates of tax evasion size; those are very significant lost revenues; and what’s more, it’s unfair for competitors in the same industry who DO pay VAT and income taxes.
http://www.ohmynews.com/NWS_Web/View/at_pg.aspx?CNTN_CD=A0001813780
Anyway, regarding the fare hike, I agree it’s kinda insulting especially given that bus drivers are getting a 3.7% wage hike despite “zero inflation” and significantly lower nationwide wage growth. 20% discount for early rides also seems too puny. Also it doesn’t address the evening peak time (not as bad as morning, but still pretty bad).
And I don’t understand why it’s still even possible to pay with cash…the cost of dealing with all those bills/change + the safety issue (bus usually starts moving when people are still paying) and time lost waiting in line doesn’t make a lot of sense. And you can recharge the T-Money card in so many places (not to mention many people can use NFC phones).
Sean,
Thanks for the comments. Some good information in there.
No kidding about paying in cash. It would save a bundle to get rid of that whole system. I think the suggestion about generating revenue from tax evaders is definitely a productive and promising one, too.
I’m of course well aware of the거래세 (stock transaction tax) and didn’t go into detail because I figured it was common knowledge to all (I should have said “the” tax rather than “a” tax, though). And it is a really good thing that South Korea has it, making the USA that much more backward. Some of the revenue generated from that tax could be specifically earmarked for keeping transportation fares for the general public stable, with tiny increases in it as necessary to keep it stable.
As mentioned before, claiming revenue from tax evaders is a good idea—but not from the little guy running a fruit stand or an officetel textile business; not primarily from hardworking entrepreneurs running the medium-sized businesses that are the backbone of the economy either. Of course every player, major and minor, should contribute. And the chart in the article http://www.ohmynews.com/NWS_Web/View/at_pg.aspx?CNTN_CD=A0001813780 you linked to makes that clear. But what is needed most is to garner revenue from those who owe the most—and those who evade the most—the conglomerates, both domestic and multinational, a tiny percentage of whose holdings in offshore tax havens could just about make the subway free for everyone (exaggeration of course).
And individuals with incomes of over USD 1,000,000 per year who don’t want to pay taxes should be held morally accountable with an eye on shaming them into contributing their fair share. If that doesn’t work, the legal code would be a good way to generate revenue from them rather than from hardworking fruit stand people and small/medium-sized business owners who are actually doing the hard work.
U.S. tax rates on high income earners are way too low. One of the main reasons the U.S. was able to build such a prosperous society post-WWII was the top tax rates of 90% plus after the war to 77% in the Carter administration. Lowering the tax rates did not encourage any “job creators,” but just facilitated a transfer of wealth from the bottom (whose productivity increased dramatically during that period, but whose real wages did not) to the top, who didn’t use their tax cuts to improve the health or wealth of the nation. They just pocketed it all.
The gap between rich and poor, which is now dramatic in Korea, is following a similar (though thankfully not quite as severe as in the U.S.) trajectory. And the top, were they morally grounded, would be happy to contribute more for the betterment of all.
So no. Do not go after the little guy. Revenue should come from sources least affected by the small expenditure required to make transit affordable for all.
Why, again, should the “ultra-rich” fund the subway system?
Because they profit off the labour of those using the subway system.
When somebody asked Louis Armstrong what jazz was, he famously said, “Man, if you gotta ask, you’ll never know.”
The same could be said in reply to the question of why people who can most afford to fund infrastructure should fund it.