Real Estate Tax OECD No.1... 'House Price Surge → Tax Bomb' Final Winner is Moon Administration

Analysis by Rep. Yoo Kyung-jun's Office of the People Power Party... Korea Ranks 1st with 3.976% Real Estate Property Tax to GDP Ratio

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Kwon Haeyoung] South Korea's real estate property tax burden relative to its Gross Domestic Product (GDP) was found to be the highest among the member countries of the Organisation for Economic Co-operation and Development (OECD). Amid the Moon Jae-in administration's real estate policies, which have completely failed by sharply raising housing prices and delivering despair to the homeless while imposing a 'tax bomb' on single-home and multi-home owners, criticism is emerging that the government itself has become the ultimate winner of the housing price surge.

According to the office of Yoo Kyung-joon, a member of the People Power Party, on the 13th, South Korea's real estate property tax burden relative to GDP was 3.976% in 2020, ranking joint first with France among the 38 OECD member countries. Real estate property tax includes property tax, transaction tax, inheritance and gift taxes combined. Following were the United Kingdom (3.855%), Luxembourg (3.834%), and Canada (3.777%), ranking 3rd to 5th respectively.

South Korea's real estate property tax burden relative to GDP was ranked 8th at 2.964% in 2017, the first year of the Moon Jae-in administration, but rose two places to 6th in 2018 at 3.098% and in 2019 at 3.113%, then surged to 1st place in 2020.

With the increase in the share of real estate holding taxes such as property tax and comprehensive real estate tax, Yoo's office analyzed that South Korea's real estate property tax burden ratio will exceed 4% in 2021, securing sole first place. South Korea's real estate holding tax burden relative to GDP is expected to increase from 1.04% in 2020 to 1.2% in 2021, a rise of 0.16 percentage points.

This trend is the exact opposite of the average trend among OECD member countries, where the share of real estate property tax is declining. The OECD average real estate property tax burden relative to GDP has been steadily decreasing from 1.833% in 2017 to 1.770% in 2018, 1.768% in 2019, and 1.617% in 2020. In the case of the United Kingdom, it ranked first from 2017 to 2019 with 4.262%, 4.141%, and 4.070% respectively, but dropped to 3rd place with 3.855% in 2020, down from 0.215%.

South Korea also had the highest growth rate in the actual amount of property tax burden among OECD countries. Korea collected $48.12 billion in property taxes in 2017, which increased by a whopping 34.7% to $64.834 billion in 2020. During the same period, capital gains tax rose 50% from $13.385 billion to $20.045 billion, also showing the highest growth rate. The share of capital gains tax relative to GDP increased from 0.8% in 2017 to 1.229% in 2020. In contrast, Sweden's share fell from 1.7% to 1.206% during the same period.

Yoo Kyung-joon said, "Since the launch of the Moon Jae-in administration, housing prices have skyrocketed due to the failure of real estate policies, and real estate-related taxes have also increased sharply. The failure of the Moon administration's real estate policies has been proven through comparisons of real estate taxes with OECD countries."

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