The Korea Local Administration Review

The Korean Local Government Finance code includes discussion on thetaxation of hydroelectric, atomic-electric, and thermoelectric power. Taxation ofhydroelectric power plant started since 1992, while that of atomic-electricbegan 2006. However, tax on thermoelectric power plant will begin 2014. Thethermoelectric power makes up 67.5% of total electric power in Korea, and itgenerates more environmentally damaging pollutants than either thehydroelectric power plant or atomic-electric power plant, causing extraordinaryenvironmental damage and costs. Specifically, the thermoelectirc power plantsdo damages both on the air and the water. It generously generate SOx, NOx,and dust. It also generates hot water, causing damages even on water qualityas well as biosystem and natural resources in the rivers and seas.For political reasons, the taxation on thermoelectric power plant has delayedin the next three years. Although it is enforced, the current law imposes only0.15 won per kilowatt, which is much lower than either the hydroelectric powerplant or atomic-electric power plant. Although the tax on thermoelectric powerplant will generate some revenues, it is far from being complete to bringadequate revenue sources for affected local governments. In sum, it is hightime to consider social marginal cost to correct externalities in imposing taxeson thermoelectric power plant to bring adequate amount revenues for localgovernment.
 
□ Keywords: Thermoelectric Power Taxation, social marginal cost, externalities