'50% Property Tax Reduction on Single Homes Under 900 Million Won' Proposed by Seocho District Mayor 'Rejected'

At the 152nd regular meeting of the Seoul District Mayors' Association held via video conference from 5 PM on the 31st, Seocho District Mayor Jo Eun-hee's proposal was rejected... Mayor Jo stated, "The government must quickly set the criteria and timing for property tax reductions. I plan to move forward steadily, seeing only citizens despairing under the tax burden."

[Asia Economy Reporter Park Jong-il] On the 31st at 5 p.m., Seocho District Mayor Joeunhee submitted a proposal at the Seoul Metropolitan Council of District Mayors' general meeting held via video conference to "reduce the local tax portion of property tax by 50% only for single-homeowners with publicly announced property prices under 900 million KRW," but it was not accepted.

However, Seocho District decided to independently pursue a property tax reduction policy.

Mayor Joeunhee explained, "Article 111, Paragraph 3 of the Local Tax Act stipulates that local government heads can reduce property tax rates by up to 50% in disaster situations. Considering the current COVID-19 crisis as a condition requiring adjustment of property tax rates under the Local Tax Act, I submitted this proposal."

Mayor Joeunhee first noted that the scale of revenue reduction due to the property tax rate cut is manageable compared to the overall financial conditions of autonomous districts. If all 25 districts reduce the local tax portion of property tax by 50% for all households with publicly announced property prices under 900 million KRW, the total amount would be approximately 167.3 billion KRW, with an average of 6.7 billion KRW per district. Compared to the average budget of 741.3 billion KRW for the 25 districts based on the 2019 settlement, the average property tax reduction per district of 6.7 billion KRW is about 0.9%, and only 8.8% of last year's average unspent balance of 75.9 billion KRW per district. It is also similar in scale to the average amount of 6.4 billion KRW that districts shared as 10% of the first emergency disaster relief fund payment (70% national, 30% city, 10% district funds).

He added that if the tax rate reduction scope is narrowed to "single-homeowners," the scale of property tax refunds would significantly decrease, and since districts can autonomously decide the target and rate of property tax reduction according to their situations, the financial burden could be further reduced. He also mentioned that in 2004 and 2005, during property tax rate reductions, district offices flexibly reduced property tax rates by 10% to 40%.

Secondly, he emphasized that even if property tax rate reductions are decided at the district level, there is no impact on the shared tax portion.

Seocho District considered reducing the tax rates for the district portion and the special city portion of property tax, and after reviewing the impact on other districts' revenues and obtaining legal advice, proposed to pursue property tax rate reductions limited to the district portion.

Therefore, each district can autonomously pursue property tax rate reductions for the district portion through amendments to district tax ordinances, and Seoul City was requested to participate in reducing the shared tax portion rates through amendments to city tax ordinances to alleviate the tax burden on citizens struggling with soaring property taxes and COVID-19.

Thirdly, the necessity to reduce the tax burden on single-homeowners has already gained national consensus. On August 10, the President announced plans to review additional tax measures for single-homeowners, and on the same day, the Deputy Prime Minister stated that a plan to reduce housing property tax rates for single-homeowners for actual residence purposes would be announced in October.

The government has made a policy judgment that tax relief measures are needed for actual single-homeowners who are not speculators, and he believes the district mayors present also share this view.

Fourthly, the current COVID-19 situation qualifies as a social disaster under Article 3 of the Framework Act on the Management of Disasters and Safety. On March 10, the Ministry of the Interior and Safety declared that damages caused by COVID-19 are included in social disasters, and based on this, in May, the government and local governments nationwide provided emergency disaster relief funds to all citizens.

The current crisis caused by COVID-19 is a clear disaster situation, and he argued that it is time for local government heads, who know their regions best, to take the lead in efforts to overcome the disaster.

Finally, he stated that utilizing the property tax reduction authority granted to local government heads under the Local Tax Act to overcome the current crisis aligns with the spirit of local autonomy.

On August 27, the Bank of Korea forecasted this year's economic growth rate to be a maximum negative 2.2%, the first since the 1998 foreign exchange crisis. The current COVID-19 situation is effectively under strong social distancing measures equivalent to level 3, and discussions on the second disaster relief fund payment are intensifying, making the situation urgent.

In such a grave situation, waiting until October for the government's announcement does not fit the status and role of the "Seoul Metropolitan Council of District Mayors," which leads the era of local autonomy. Now is the time to exercise the authority of local government heads to reduce property tax rates as stipulated in the Local Tax Act amid soaring property taxes and the unprecedented COVID-19 crisis. This would better embody the spirit of local autonomy.

He appealed that the bold and immediate actions of district mayors would serve as a signal and support to expedite the government's swift decisions.

In his closing remarks, Mayor Joeunhee said, "Currently, as COVID-19 is a national disaster, the property tax rate reduction proposed by Seocho District is limited to the district tax portion and has no effect on the shared tax portion; considering the financial scale and conditions of districts, the reduction scale can be autonomously set at a manageable level; the tax burden reduction for single-homeowners must be implemented immediately; and Seoul's autonomous districts, leading local decentralization and autonomous finance, must take responsible roles. I ask for the active cooperation of district mayors."

He also introduced that former Seoul district mayors in 2004 and 2005, despite not being disaster situations, took autonomous property tax rate reduction measures in about 20 districts to alleviate the burden of soaring property taxes.

After the proposal was rejected, Mayor Joeunhee said, "I suggested to the government to quickly set standards and timing for property tax reductions, but it was rejected. The government must set these standards and timing quickly. I will walk forward step by step, seeing only the citizens despairing under the tax bomb."

Meanwhile, the Seocho District Council's Democratic Party members submitted an ordinance proposal for property tax reduction.

This content was produced with the assistance of AI translation services.