Legislation Committee Review Report Points Out "Ruling Party's Proposal Violates Tax Legal Principle and Other Issues"

Significant Impact on 1.1 Billion Settlement... Calls for Thorough Review Raised
Ruling Party Clashes with Opposition Over Other Controversial Bills Including Media Arbitration Act and Climate Crisis Act

On the morning of the 17th, Yoon Hoo-duk, the chairman, is convening a meeting related to the 2020 fiscal year settlement at the National Assembly Planning and Finance Committee plenary session. (Photo by Yonhap News)

[Asia Economy Reporters Kim Hyunjung, Koo Chae-eun, Geum Boryeong] Regarding the comprehensive real estate tax law, it appears that the ruling party's dramatic agreement to set the tax threshold at 1.1 billion KRW instead of taxing the 'top 2%' was influenced by the review report from the National Assembly's Budget and Accounts Committee (BAC) expert. The BAC review report pointed out that the ruling party's proposal "violates the principle of legality in taxation, as well as issues such as undermining predictability and tax equality."

Specifically, it stated that taxing based on the relative proportion of the top 2% reduces clarity and predictability, necessitating a thorough review from the perspective of the principle of legality in taxation. It also raised the possibility of violating the principle of taxing according to taxpayers' ability due to changes in deduction criteria. Additionally, concerns about tax equality were added, noting that due to rounding, some taxpayers not included in the top 2% might bear the comprehensive real estate tax burden, while some within the top 2% might not be taxed.

Initially, when using the 'top 2%' as the standard, there were concerns that homeowners in the Gangnam area might face inconsistent tax imposition even within the same complex or building, and many pointed out the low predictability of taxpayers' payments. Ultimately, it is interpreted that these objections could not be overcome. In particular, as discussions on detailed taxation criteria such as joint ownership continued, it seems the ruling party kept in mind the high possibility of legal disputes arising from fairness controversies and tax resistance.

If the top 2% standard had been applied, some owners of multi-family housing with official prices between 1.1 billion and 1.2 billion KRW could have been subject to payment, but setting the threshold at 1.1 billion KRW is expected to reduce confusion. According to the office of Rep. Choo Kyung-ho of the People Power Party, as of 2021, there are a total of 44,056 multi-family housing units in Seoul with official prices between 1.1 billion and 1.2 billion KRW. More than half (54.1%) of these are concentrated in the four Gangnam districts (Songpa-gu, Seocho-gu, Gangnam-gu, Gangdong-gu).

Meanwhile, the ruling party is clashing with the opposition over the Media Arbitration Act, Climate Crisis Act, Operating Room CCTV Act, and Google Fair Trade Act. The Democratic Party plans to forcibly pass the amendment to the 'Act on Media Arbitration and Damage Relief' (Media Arbitration Act), which imposes up to five times damages for false or fabricated reports, at the full meeting of the National Assembly's Culture, Sports and Tourism Committee on the same day. This bill was unilaterally processed at the Culture Committee's agenda coordination meeting the previous day, with all opposition lawmakers absent. The People Power Party is preparing for an emergency situation by convening an urgent party meeting, and the Justice Party is strongly opposing by urging a full review of the bill with four media organizations, but the ruling party's intention to pass it alone on the 25th remains strong.

The 'Basic Act on Carbon Neutrality and Green Growth for Climate Crisis Response (Climate Crisis Response Act)' was also unilaterally passed by the Democratic Party at the Environment and Labor Committee on the same day. This bill includes raising the national greenhouse gas reduction target (NDC) for 2030 to '35% or more.' Although the People Power Party and Justice Party failed to reach consensus on the target setting, the bill was passed unexpectedly in the early morning without opposition lawmakers present. Additionally, there are significant disagreements between the ruling and opposition parties over the amendment to the Medical Service Act mandating the installation of operating room CCTV and the Google Fair Trade Act, but the ruling party has committed to forcibly passing them in August.

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