By Yoon Ja-young
Staff Reporter
Comprehensive real estate tax, which only considers how much real estate one owns, is unfair as there is little relation between the real estate and one's income, the Korea Institute of Public Finance said.
According to the analysis by Ro Young-hoon, a senior fellow at the institute, there turned out to be little relation between household income and the price of houses. The bottom 10 percent in terms of income were more likely to own their own houses than those between the bottom 10 to 40 percent.
When comparing the prices of houses, those in the top 40 to 50 percent income bracket had less assets than the bottom 40 to 50 percent despite higher income.
Ro said the comprehensive real estate taxes, levied according to how much real estate each household owns, could be unfair. He added that drastic tax hikes could be problematic as those who own expensive homes are not always high income earners.
He also raised issues regarding the move to cut capital gains tax on those who own only one house. ``The number of houses doesn't reflect one's income or wealth.'' Ro pointed out that one house may be a hundred times more expensive than another.
Comprehensive real estate tax was introduced to suppress the real estate bubble. Only 2 percent of total households in the country are subject to the tax levied on real estate-wealthy people.
However, some have raised questions over the equity of the tax. The new government is likely to ease taxes and other regulation on real estate following President Lee's pledges.