Yoon Administration's Proposed 'Comprehensive Real Estate Tax Relief' Effectively Fails to Pass in August... Ruling and Opposition Parties' Meeting Breaks Down

Tension Over Tax Subcommittee Chair Seat
Ruling and Opposition Parties Fail to Schedule Finance Committee Meeting
Concerns Rise Over Corporate Tax Rate Cut Stalling

Park Dae-chul, Chairman of the National Assembly's Planning and Finance Committee, is striking the gavel while presenting the "Amendment to the Comprehensive Real Estate Tax Act and the Restriction of Special Taxation Act" at the Planning and Finance Committee plenary meeting held at the National Assembly in Yeouido, Seoul, on the afternoon of the 24th. At the meeting held that day, the Democratic Party of Korea claimed that the reduction of the comprehensive real estate tax was a "clear tax cut for the rich" and did not attend the meeting. 2022.8.24 Photo by the National Assembly Press Photographers [Image source=Yonhap News]

[Asia Economy Reporter Hyunju Lee] The bill to temporarily exempt comprehensive real estate tax (CRET) up to 1.4 billion won for one household with one house was effectively blocked in the August extraordinary session of the National Assembly. To be submitted to the plenary session on the 30th of this month, the bill must pass the Planning and Finance Committee, the relevant standing committee of the National Assembly, by the 25th at the latest. However, the ruling and opposition party secretaries of the committee failed to schedule a meeting on that day. The opposition from the Democratic Party, which calls the CRET relief a "tax cut for the rich," and the fierce power struggle between the ruling and opposition parties over the chairmanship of the tax subcommittee in the Planning and Finance Committee ultimately stalled the bill’s passage. There are concerns that not only the CRET but also the corporate tax rate cuts pushed by the Yoon Seok-yeol administration may become difficult to implement.

Ryu Seong-geol, the ruling party secretary of the Planning and Finance Committee and a member of the People Power Party, said in a phone interview that "the opposition refuses to discuss and review the CRET issue," adding, "No matter how much effort is made in the National Assembly where laws must be passed, what can be done when the party holding the majority refuses even to review the bill and does not attend meetings?" He also expressed concern, saying, "Although it is hard to predict, if the opposition takes the chairmanship of the tax subcommittee, they may refuse to review bills they oppose."

The Democratic Party holds the position that the CRET relief bill needs to be reconsidered. They also believe that since the ruling party holds the chairmanship of the Planning and Finance Committee, the subcommittee chairmanship should be held by the opposition. Shin Dong-geun, the opposition party secretary and a member of the Democratic Party, said in a phone interview, "The second half of the National Assembly has just begun, and while there are parts that need reasonable adjustment, the CRET is a bill for the wealthy in our society, so passing it carries political burdens." He added, "We passed an amendment to the CRET last year, but to ensure predictability in tax laws, the CRET-related bills need to be carefully reviewed."

With the failure to pass the bill in August, CRET payers have no choice but to receive notices based on the current law. The Democratic Party is considering passing the bill before the December payment deadline to provide refunds at the end of the year.

Amid helplessness in the face of the opposition from the major opposition party, there are concerns that upcoming bills the ruling party intends to push, such as corporate tax cuts, may be consecutively blocked. A ruling party member of the Planning and Finance Committee said, "If this continues, corporate tax cuts might be completely off the table." A People Power Party official pointed out, "Collective actions like not attending the plenary session could hurt public opinion, so the opposition seems to be aiming to take the subcommittee chairmanship, which attracts less public attention, and operate the Planning and Finance Committee by not even putting bills on the agenda."

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