The ruling People Power Party (PPP) is moving to ease tax rules concerning the ownership of multiple houses or a single high-value property, as well as inherited wealth, according to political pundits and financial industry officials, Sunday.
The taxes have been the subject of contention for years, with some arguing that they contradict the fundamental principles of a market economy.
The presidential office and the Ministry of Economy and Finance are actively pursuing measures to abolish the comprehensive real estate holding tax.
Imposed separately from property taxes collected by local governments, the comprehensive real estate holding tax is levied annually by the central government on individuals who own multiple homes with a combined appraisal value exceeding 900 million won ($649,000).
The tax is also levied on owners of a single property exceeding 1.2 billion won in value.
Regarding inherited wealth, the PPP is contemplating revisions to bills aimed at reducing the inheritance tax rate, which currently reaches up to 50 percent. These discussions are taking place in the new National Assembly session that commenced on May 30.
Critics regarded the two tax rules as punitive measures for wealthy individuals, and at the same time, argue that they undermine market growth.
For instance, the price of apartments, the most popular form of housing in Korea, averages 1.29 billion won in Seoul and, as such, even the average property owner is subject to additional, heavy taxation for owning a house.
In some cases, inheritance taxes have compelled small and medium-sized family businesses to forego corporate succession due to the financial burden they pose. These taxes, which rank second highest in the OECD, trailing only Japan’s 55 percent rate, have proven particularly challenging for these businesses to manage.
“Against this backdrop, I commend the government and the PPP for their efforts to uphold President Yoon Suk Yeol’s pledge,” said Kwon Dae-jung, a real estate professor at Sogang University.
The professor referred to Yoon’s commitment to reform the comprehensive real estate holding tax and inheritance tax under his market-driven economic vision.
The professor emphasized the importance of fine-tuning priorities , with the main opposition Democratic Party of Korea 카지노사이트킹 (DPK) saying that it will be crucial for the successful overhaul of the comprehensive real estate holding tax.
He pointed out that the DPK raised the issue of necessary tax reforms shortly before the new Assembly commenced, highlighting a discrepancy in goals compared to the government.
The main opposition wants to scrap taxing owners of a single home only, while the government wants to leave the policy unchanged and rather ease tax rules for owners of multiple homes.
According to the sources, the government is concerned that the DPK’s goal will prompt would-be home buyers to search for a single, expensive home and correspondingly promote real estate speculation.
On inheritance tax, the government is expected to ease rules in accordance with the Corporate Value-up Program aimed at boosting the Korean stock market.
The program prioritizes improving corporate governance, which the sources say can be cited as a reason to soften inheritance taxes for competitive businesses run by generations of families.