Abolition of Comprehensive Real Estate Tax Bill for 'Top 2%'... Threshold Raised from 900 Million to 1.1 Billion Won

[Image source=Yonhap News]

[Asia Economy Reporter Hyunju Lee] The ruling and opposition parties reached a sudden agreement on the comprehensive real estate tax (종부세) relief plan on the 19th. The deduction amount, which serves as the tax base, was set at 1.1 billion KRW. The Democratic Party's proposal to impose the tax on the top 2% of official property prices, which had been pushed as party policy, was abruptly scrapped.

The National Assembly's Planning and Finance Committee held a tax subcommittee meeting that morning and approved the amendment to the Comprehensive Real Estate Tax Act reflecting this content. The amendment, created as a committee alternative, is scheduled to go through the full Planning and Finance Committee meeting in the afternoon. The amendment includes raising the additional deduction for single-homeowners from 300 million KRW to 500 million KRW. Adding the basic deduction of 600 million KRW, the tax base becomes 1.1 billion KRW.

Initially, the Democratic Party had been promoting a plan to impose the comprehensive real estate tax on the top 2% as party policy. Since this bill is based on a relative proportion of the top 2%, it required review from the perspective of the principle of taxation by law. Problems were raised such as some taxpayers bearing the tax burden despite not being in the top 2% due to rounding, or some in the top 2% not being taxed. The People Power Party argued that the amount should be fixed in absolute terms.

It is reported that both parties agreed in this subcommittee that since the tax base criteria introduced in 2009 have not reflected the rise in housing prices and inflation, the number of taxpayers has increased significantly. They also considered the timing of sending the tax notices. The notices are sent every November, and considering administrative procedures and appeals, August was effectively the deadline for the National Assembly to amend the Comprehensive Real Estate Tax Act. Kim Young-jin, the ruling party secretary of the Planning and Finance Committee and a Democratic Party lawmaker, said, "Because there is a deadline for sending notices, we must finalize it today," adding, "The goal is to pass it at the plenary session on the 25th."

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