Property Tax Relief? 'D-1'... Song Young-gil Leadership on the Test

Democratic Party Special Committee Proposes 2% Official Land Price Target
Song Young-gil Denies 'Tax Cut for the Rich' but Faces Strong Internal Opposition

[Image source=Yonhap News]

[Asia Economy Reporter Park Cheol-eung] A decision will be made on the 11th whether to ease the comprehensive real estate holding tax (종합부동산세) to target the top 2%. Song Young-gil, the leader of the Democratic Party of Korea who took office early last month, is strongly pushing this proposal, but opposition within the party remains strong, making it difficult to predict the outcome. Given the symbolic significance of this tax, it not only serves as a gauge for the ruling party’s tax policy direction but also holds political meaning as a litmus test of Song’s leadership.

According to the Democratic Party on the 10th, the party’s Special Committee on Real Estate will announce additional housing supply measures on the same day, followed by a party caucus on the 11th to decide whether to ease the 종부세. The committee announced on the 27th of last month a proposal to change the 종부세 tax base, currently set at 900 million KRW, to the "top 2% of official land prices," and stated that a conclusion would be reached through further discussions by June.

Hong Ik-pyo, head of the Democratic Research Institute and a Democratic Party lawmaker, told Asia Economy in a phone interview, "The party leader holds overall responsibility and delegated authority, but in the case of 종부세, if opinions are not unified at the caucus, it will be difficult to enforce. At least more than half need to support the committee’s proposal for it to be possible."

Hong, who served as the chairman of the party’s Policy Committee before Song’s inauguration, has emphasized a cautious approach to easing the 종부세. He said, "At this point, it is difficult to predict the outcome, and it depends on how well the committee presents sufficient data at the caucus and how many lawmakers accept it."

Although it is the committee’s proposal, it can also be considered Song’s proposal. On the 7th, Song appeared on KBS’s "Sasa Geongeon" and said, "Limiting the 종부세 tax base to 2% would reduce taxes by about 65 billion KRW," emphasizing that it is not a 'tax cut for the rich.' He also said, "We are proposing a structure where the taxes paid by the top 2% contribute to housing supply for ordinary citizens. When detailed figures are disclosed at the caucus on the 11th, lawmakers will sympathize."

Easing the 종부세 is one of the measures Song proposed as both a cause and solution to the Democratic Party’s defeat in the April 7 by-elections. However, opposition within the party is strong. Woo Won-shik, a lawmaker who competed against Song, said in a phone interview, "I have opposed easing the 종부세 since the party leader election," adding, "There will be strong voices against it. Many believe that the priority should be solving the problem of rapidly rising real estate prices, and easing tax policies that could undermine price stability is problematic."

The cautious stance was also the reason why no conclusion was reached at the party caucus on the 27th of last month. Kang Byung-won, a Supreme Council member of the Democratic Party, said in a media interview, "Raising the 종부세 threshold is not easy considering the views of many lawmakers."

Of course, there are also many supporters who argue that tax burdens should be considered in light of the changed market environment. Moon Jung-bok, a Democratic Party lawmaker on the National Assembly’s Land, Infrastructure and Transport Committee, said in a phone interview, "Since 24% of Seoul apartment owners are subject to the 종부세, easing it is natural," adding, "At the party caucus at the end of last month, there were opinions that easing the 종부세 might look like a regression of government policy, but the current real estate market situation must be fully taken into account."

Song is attempting reform and moderate expansion through apologies regarding the so-called ‘Cho Kuk incident’ and recommending withdrawal (or expulsion) of lawmakers suspected of real estate speculation, but he faces backlash from traditional Democratic Party supporters. In this situation, if the 종부세 easing proposal fails to pass, it is expected to deal a significant blow to the party leader’s leadership.

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