Record High Asset Tax Revenue from Real Estate and Stocks... March Real Estate Tax Reform Plan in Focus

Photo by Hyunmin Kim kimhyun81@

[Asia Economy Sejong=Reporter Son Seon-hee] Last year, tax revenues related to real estate and stock transactions were collected at record levels. Contrary to government forecasts, capital gains tax was collected at more than twice the government's expected amount due to rising house prices and increased transactions. Attention is increasingly focused on the comprehensive real estate tax reform plan announced by the ruling party and government for March.

According to the Ministry of Economy and Finance on the 12th, last year's national tax revenue totaled 344.0782 trillion won, an increase of 58.532 trillion won (20.5%) compared to the previous year (285.5462 trillion won).

Despite the prolonged COVID-19 pandemic, the government cited three reasons for the over 20% annual increase in tax revenue: faster-than-expected economic recovery, real estate, and contingent tax revenues such as inheritance tax.

Taxes related to economic recovery, such as corporate tax, securities transaction tax, and value-added tax, increased by a whopping 38.3 trillion won (65.5%) compared to the previous year. This was due to record-high export and import performance and rapid recovery across all economic sectors including consumption and employment.

Additionally, real estate-related tax revenues such as capital gains tax, gift tax, and comprehensive real estate tax increased by 17.2 trillion won, showing a 29.3% increase compared to the previous year. Contingent tax revenues such as inheritance tax also rose by 3 trillion won.

Ultimately, there are criticisms that the government's failure in real estate policy caused these errors in tax revenue forecasts. A Ministry of Economy and Finance official acknowledged, "The basic data for tax revenue forecasts by category are economic indicators related to the real estate market, but the uncertainty in real estate market forecasts was too high, leading to significant errors in projections. There was also considerable uncertainty in the capital gains tax revenue model, limiting accurate estimation."

Accordingly, the ruling party and government have announced plans to unveil a real estate tax reform plan coinciding with the announcement of official apartment land prices in March. Measures to adjust the pace of increase in the fair market value ratio, which has steadily been realized since the Moon Jae-in administration, are also being discussed. In particular, applying this year's official land prices when calculating property taxes is reportedly under consideration.

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