Reduction of Property Tax for Single-Homeowners, Hong Nam-ki "Under Review"... Government Ultimately Takes a Step Back

Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Strategy and Finance [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Son Seon-hee] The government has decided to consider measures to ease holding taxes such as comprehensive real estate tax and property tax for single-homeowners. Since the Moon Jae-in administration, income from real estate price gains has been regarded as 'unearned income,' maintaining a policy of strengthening holding taxes. However, faced with strong demands from the ruling party led by Lee Jae-myung, the Democratic Party candidate, the government has ultimately taken a step back and accepted the proposal.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said at the real estate inspection meeting with related ministers on the 22nd, "We have been reviewing supplementary measures to partially ease the tax burden on low- and middle-income single-homeowners." The following day, on the 23rd, he specified the timing through his social media (SNS), stating, "We plan to announce specific implementation plans in March next year." The presidential election will be held in March next year.

Proposed measures to ease holding taxes for single-homeowners include adjusting the current 150% cap on tax burden, applying this year's publicly announced property prices when calculating the comprehensive real estate tax base for next year, and introducing a deferral system for elderly taxpayers' comprehensive real estate tax payments.

Deputy Prime Minister Hong has been an advocate for 'strengthening holding taxes' since his appointment. In December 2018, while still a nominee, he stated in a pre-hearing response to the National Assembly, "To efficiently utilize real estate, it is necessary to increase the proportion of holding taxes and reduce transaction taxes in the mid to long term."

During the confirmation hearing, he also said, "Compared to advanced countries, it is true that Korea's holding taxes are low," and "holding taxes should be gradually increased."

There are considerable concerns within the government about the policy shift to tax reform that contradicts the existing stance of 'strengthening holding taxes,' especially as the government, which has been advocating for holding tax increases to stabilize housing prices, yields to pressure from the ruling party ahead of the election. A Ministry of Economy and Finance official expressed concern, saying, "If tax policies keep changing according to political situations, not only this case but also future government policies will suffer serious credibility damage."

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