Jun Ji-hye, a reporter at the finance desk of The Korea Times, focuses primarily on economic policy and government agencies, mainly covering the Ministry of Finance and Economy, the Ministry of Budget and Planning, the National Tax Service and the Korea Customs Service. She previously covered financial authorities, including the Financial Services Commission and the Financial Supervisory Service, and earlier worked on the political, city and business desks, reporting on a wide range of issues.
Gov't eases property tax reform amid public backlash
Apartment buildings across Seoul are seen from the observation deck of 63 Building in Yeouido, Sunday. Yonhap
By Jun Ji-hye
The government scrapped a plan to lower the basic deduction under the comprehensive real estate tax to 900 million won ($657,000) for nonresident single-home owners, deciding to retain it at the current level of 1.2 billion won, the Ministry of Finance and Economy said Tuesday.
The original measure was intended to tighten property tax rules for homeowners who do not live in their properties, but it faced substantial public opposition. The decision to drop the measure came after leaders of the ruling Democratic Party of Korea called for the government to reconsider it.
The changes, however, are still subject to parliamentary approval and could be revised during the legislative process.
The finance ministry said the Cabinet approved the final versions of 11 tax-related bills earlier in the day after consultations with relevant ministries.
The original reform package, unveiled last month, sought to differentiate the tax treatment of single-home owners based on whether they actually lived in their properties.
Under the proposal, the basic deduction would have risen from 1.2 billion won to 1.4 billion won for owner-occupiers, while being cut to 900 million won for those living elsewhere.
The plan drew criticism that it could unfairly burden homeowners who are unable to live in their properties for legitimate reasons, including employment, education or caregiving. The ruling party subsequently called for a review of the measure during a recent high-level government-party meeting.
Under the final version, the deduction for owner-occupiers will be raised to 1.4 billion won as originally planned, while the 1.2 billion-won deduction will be retained for nonresident single-home owners.
For married couples jointly owning one home, the deduction for nonresident owners will be increased to 600 million won each from 400 million won. The deduction for resident couples will remain at 900 million won each.
The government also reversed course on the tax burden cap. It had initially proposed raising the ceiling on comprehensive real estate taxes on homes and land to 200 percent from the current 150 percent of combined property and comprehensive real estate tax bills paid in the previous year. The cap will instead remain unchanged at 150 percent.
The government likewise substantially scaled back its planned overhaul of individual savings accounts (ISAs).
It had proposed limiting standard ISA contracts to a maximum of five years and prohibiting savers from carrying unused annual contribution allowances into subsequent years.
Both measures were dropped in the final package, leaving the existing three-year minimum contract period while removing any limit on the maximum duration.