The government has released a list of real estate policy initiatives that includes stronger real estate tax, an expansion of the program of taxation of actual transaction prices, and redeeming profit from development. It wants to double real estate tax from 2003 levels by 2008. The real estate market has had a vague understanding of the directions of real estate policy and so it is significant that the government is making its intentions clear. "Real transaction price" taxation is applied to households with three or more homes but it wants to reduce that to households with two or more homes starting next year, and that appears to be an appropriate decision. It is desirable in the context of deterring speculative investment in the process of setting straight the country's twisted taxation system.
Stronger real estate taxes and taxation based on "real transaction price" is indeed the direction policy should be going in. Even so, it would be nice to be able to minimize the discord as much as possible. There will be a heavier tax burden, so you cannot ignore the possibility of tax resistance. There could be complications in the course of implementation because the impression that the government keeps making taxes a bigger burden. That is why it should not be stingy in reducing acquisition and registration tax. It is not impossible to understand why the government, which has to think about the state of national finances, says it is going to reduce the real estate transfer tax over 2 to 3 year intervals. Still, that cannot be called government administration that looks at matters from the people's perspective. It should positively consider reducing the transfer tax first, after looking at its revenue outlook in detail. It also needs to find a way to adjust the standard for "comprehensive real estate tax," which is currently too lax, so that persons with excessive holdings pay heavier taxes while the common people (seomin) and middle class individuals who own only one home have a relaxed tax burden.
While the reorganization of the "basic facility allotment system" for redeeming profit from development is a step forward as far as claiming profit is concerned, it needs to be more fine-tuned. For example, in the case of reconstruction there are things such as the requirement that rental housing be constructed, that basic facilities such as parks and roads be contributed, and that money be paid for school facilities, and so while those are issues dissimilar in character someone facing those requirements might feel they are overlapping and redundant. If people feel they are having money taken away from them this way and that it there might be resistance. It would be best to make things simpler by integrating them as much as possible.
The Hankyoreh, 6 May 2005.
[Translations by Seoul Selection (PMS)]
More Work Needed on Real Estate Policy |
