Just and Fair

Revision of Rules Require Social Consensus

The Constitutional Court's ruling Thursday virtually neutralized the comprehensive real estate taxation introduced by the Roh Moo-hyun administration. Now the debate is on whether to kill the ``punitive" property tax completely or keep it alive to play its original role ― cooling off property speculation fervor.

Some officials at the governing Grand National Party (GNP) call for doing away with the property tax by lowering the tax rate further, while raising the ceiling of home prices subject to heavy taxation from the present 600 million won to 900 million won. They stress the abolition of the unusually heavy property tax was one of the campaign pledges of President Lee Myung-bak.

``It was an anti-market, anti-capitalistic taxation targeted at a specific group of (well-to-do) people," said a GNP official, who called for abolishing the tax and integrating it into general property taxes.

The opposition Democratic Party (DP) couldn't differ more. DP President Chung Se-kyun, while describing the ruling as ``a really bad decision," called for pulling down the taxation ceiling while pushing up tax rates so that people with expensive homes pay more in taxes.

Legal expertise may be beyond the reach of most laymen. But the recent ruling seems to have at least two problems. First, it considered only the technicalities of the law, not its spirit. Second, eight out of the nine judges at the top court were those with expensive homes subject to the heavy taxation, in what could constitute a conflict of interest.

The heavy real estate tax was originally introduced to help calm down speculative frenzy and inject more equitability in society through rectifying taxation.

We agree with some of its opponents, who say the punitive tax was especially unfair for the aged, long-term owners of pricey homes, who bought them a long time ago for no speculative purposes and are now finding it difficult to pay taxes with their meager income. There were lots of ways to exempt these people as exceptions, while maintaining the original purpose of the tax. But the Lee administration and the establishment as a whole was just busy tearing down the barriers to seeking expensive properties.

The biggest victims of the virtual abolition of the comprehensive property tax are people living in provinces in part because the reduced governmental revenue would deprive them of budget grants created from this tax, making it nearly impossible for local governments to provide basic welfare programs to needy people.

Even worse, there could arise a serious inequity in taxation, as residents in the capital will be able to avoid taxes by ``splitting the ownership" of their homes between spouses or other family members, while people in provinces with less expensive homes will not be able to do so.

Most worrisome is the latest decision, along with other deregulation on the property market under the pretext of economic recovery, would re-ignite the property speculation beyond control. Politicians should reach a bipartisan accord not to aggravate the tax law and income polarization.

As the old saying goes, ``The law cannot prevail over the power, and the power cannot prevail over the mind of the people."