[Editorial] Property Tax Law Passed But The Work Continues

The "Comprehensive Real Estate Tax Law," the key part of the August 31 Real Estate Measures, has passed in the National Assembly after long complications. It would have looked better if the main opposition Grand National Party (GNP) had been participating and if it had been passed by agreement among the parties, but passing it now was inevitable if you consider how letting the issue carry over into the new year would have brought confusion to the real estate market.

Under the new law, homes subject to the tax will be those officially appraised at W600 million or more, and married couples will be taxed together. It is not about pressuring the rich and being divisive. Property tax on houses around the price of W1 billion is only between 0.2 and 0.3 percent, outrageously low compared to advanced nations, where it is around 1 percent. Normalizing that is only about increasing the cost of speculative investment. The GNP will be more than just irresponsible if it starts creating problems later for not having been part of the decision making process; it will also be ignoring the hardships of the common people. Those who will be paying more in property taxes should not rebel; they should accept it as the appropriate cost of owning highly priced real estate. They, too, should seek a society where all are able to live as a community by giving up the idea that they can use speculative investment to make money without having to exert any effort, and the higher taxes should be a good opportunity. The government, in turn, should do what it can to minimize unnecessary tax resistance by providing the greatest possible conveniences for people paying their taxes.

The government and ruling party must not start to get optimistic and think the work of stabilizing the cost of housing is done now that it has finished with the follow-up legislation to the August 31 Real Estate Measures. It has fixed the twisted legal regulations relating to real estate, but that alone will not guarantee the downward stabilization of house and land prices. There are a complex array of factors contributing to instability in the market, including various forms of demand for development, the popular belief that real estate speculation always wins, and the existence of massive amounts of cash with nowhere to invest. In other words, there is still a need for more complex and detailed policy. There particularly needs to be additional measures enacted in the area of land prices, since it will be hard to keep a lid on the cost of housing without stable land prices. They say the government and ruling party understand that, so we will be watching. We hope the common people will now be able to devote themselves to their livelihoods and plan their futures without having to worry about the cost of housing.

The Hankyoreh, 31 December 2005.

[Translations by Seoul Selection]