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Heavier tax on expensive home owners unlikely in 2020
Apartment complexes in Seoul / Korea Times file
By Lee Kyung-min
By Lee Kyung-min
Owners of expensive homes worth over 900 million won ($734,000) are unlikely to see their property taxes rise this year as the rival parties remained deadlocked Tuesday over a bill introduced to impose a heavier tax to curb the overheating housing market.
For the government to enforce the strengthened measure proposed last December, the National Assembly must pass it by the end of May as the bill stipulates June 1 as the date the new tax code should be applied.
But the prospect of passage has become dimmer after the ruling Democratic Party of Korea (DPK) and the main opposition United Future Party (UFP) refused to budge from their respective stances, with the last related parliamentary committee meeting ending with no tangible results, April 29.
The bill will be discarded once the current Assembly session expires. Even if a similarly drafted bill passes in the latter half, imposing a raised tax retroactively is nearly impossible, meaning the tax burden will stay the same as in 2020.
Further kicking the bill down the road are a series of emergency bills involving COVID-19 economic relief packages designed to help small- and medium-sized enterprises (SMEs) and key industries by easing lending rules and injecting more liquidity into the market by increasing the amount of bonds issued with government backing.
The Assembly could engage in the property tax feud, but the politically divisive issue will quickly sour public sentiment already swinging wildly amid a tanking economy.
The government and the ruling party have sought to increase the tax rate to up to 4 percent of the officially assessed land price for those with two or more homes and to 3 percent for those who own one home.
Also included was raising the ceiling of the maximum tax from 200 percent of the amount paid in the previous year to 300 percent.
But the main opposition have rejected the measure altogether, arguing that the ceiling of the maximum tax for those who own one home should be lowered to 130 percent of the officially assessed land price from the current 150 percent.
It also maintains that the deductible rate should be raised for home owners aged 60 and older and for those who have owned their homes for a long period, reflective of some criticisms that retired people have limited sources of income and those who have lived where they have for years are far from being part of speculative market forces.
Meanwhile, a possible cause for major concern for owners of homes worth less than 900 million won is how much of a heavier tax the government would impose, with specifics being formulated by the Ministry of Land, Infrastructure and Transport set to be announced in October.