The ruling and opposition parties are getting into the specifics about real estate policy. It is encouraging to have them actually competing over policy, and on a key issue. While there are differences in the details, there is reason for hope since the larger framework of their policy proposals are not all that different. One hopes to see that this time around speculative real estate investment is brought under control and that this becomes an opportunity to make housing and land policy like it should be.
The basic framework of the policy outlined in the mid-term announcement by the ruling Uri Party and main opposition Grand National Party (GNP) includes giving "comprehensive real estate tax" more bite, increasing the supply of housing with publicly managed development, and claiming returns from development. There are of course considerable differences regarding specifics. Uri wants to set the housing "comprehensive real estate tax" assessment standard at W600 million instead of W900 million and get rid of any cap on increases, while the GNP wants to have taxation based on total household ownership instead of individual totals, and to give special exceptions to owners of only one home. When it comes to increasing the supply of housing, Uri places the greatest emphasis on rental housing, while the GNP leans more toward "new town" development.
Even when a policy goes in the right direction its effect can differ a great deal depending on how it is implemented. The problem of multiple home ownership is far more serious than the housing shortage, so making property tax far more effective is key. There are many things distinctive about the GNP's proposal, but it is relatively less interested in improving the property tax. Uri, for its part, needs to lend an ear to the GNP's idea about combined taxation by household. It should consider lessening the burden on the middle class and on the common people since their tax burden would be larger as a result of stronger property taxes, and consider doing so by adjusting taxes in other areas.
The reason the government has not been able to effectively fight investors' desire to engage in real estate speculation is because its policies have not won the public's confidence. The two sides will start negotiations as soon as they determine the specifics of their policy proposals. The resulting legislation might be much more effective if it is produced through deliberation between the ruling and main opposition parties. Naturally they should first engage in public debate ahead of reaching an agreement, so as to allow the public to examine their proposals.
The Hankyoreh, 21 July 2005.
[Translations by Seoul Selection (PMS)]
[Editorial] Reason for Hope in Real Estate Policy |
