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[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The Democratic Party of Korea has decided to forcibly pass the amendment to the 'Comprehensive Real Estate Tax Act' at the August extraordinary session of the National Assembly, limiting the imposition of the comprehensive real estate tax to homeowners in the top 2% by publicly announced property price. This decision comes as the tax bills are scheduled to be sent out in mid-November, making it impossible to delay the bill any further. Alongside this, the ruling party plans to expedite the passage of the amendment to the Income Tax Act, which eases the capital gains tax exemption threshold for single-home households while reducing the special deduction for long-term holdings for multi-homeowners.

According to the National Assembly on the 18th, the Democratic Party will consecutively hold the Tax Subcommittee and the full meeting of the Planning and Finance Committee on the 19th to process the amendment to the comprehensive real estate tax. Kim Young-jin, the ruling party's secretary of the Planning and Finance Committee, told Asia Economy, "We are aiming to pass it in the standing committee on the 19th," adding, "We must reach a conclusion by the deadline of the Legislation and Judiciary Committee and the plenary session on the 25th." Considering the opposition party's strong objection to the amendment imposing the tax on the top 2% at the Tax Subcommittee meeting held the previous day, the ruling party may proceed with a unilateral vote.

The amendment proposed by Democratic Party lawmaker Yoo Dong-soo stipulates that the comprehensive real estate tax will be levied on "the publicly announced property price of houses corresponding to the top 2% as determined by Presidential Decree," and that "amounts below one hundred million KRW will be rounded." The threshold will be adjusted every three years or when the publicly announced property price changes by more than 10%.

The Democratic Party argues that specifying the top 2% in the law will eliminate confusion and conflict, while the opposition insists that imposing tax based on a specific ratio will increase confusion and demands raising the tax base from 900 million KRW to 1.2 billion KRW.

Park Hyung-soo, a member of the People Power Party, said at the Tax Subcommittee meeting the day before, "No country in the world sets the tax base by ratio," and added, "If it is efficient to pay taxes by ratio, then the exemption threshold for capital gains tax should also be changed to a ratio." Yoo Kyung-joon of the same party also opposed, saying, "I cannot agree with the method of setting 2% and rounding off in the enforcement ordinance."

The opposition plans to respond with statements and other measures if the ruling party proceeds unilaterally, fearing a 'second lease law controversy.' Jeong Myung-ho, a specialist of the Planning and Finance Committee, previously noted in review materials that considerations should include ▲tax equality ▲ability-to-pay principle ▲consistency with the individual comprehensive real estate tax system ▲predictability for taxpayers.

After passing the amendment to the Comprehensive Real Estate Tax Act, the Democratic Party will move on to amend the Income Tax Act. The amendment includes raising the capital gains tax exemption threshold for single-home households from the current 900 million KRW to 1.2 billion KRW and reducing the benefits of the special deduction for long-term holdings. The ruling party aims to pass this during the regular session of the National Assembly. Some expect that if the Income Tax Act is submitted to the Tax Subcommittee and discussions begin in September, it is likely to be processed only in November after the October National Assembly audit schedule.

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