The Comprehensive Real Estate Tax Likely Unprocessable by Next Month 1st... Ruling and Opposition Parties Fail to Reach Agreement Again

Minju Shifts to Policy of Agreement by End of This Month
Plans to Re-discuss at September Regular National Assembly
Disagreement over Special Deduction of 300 Million Won and Others

[Image source=Yonhap News]

[Asia Economy Reporter Hyunju Lee] The Democratic Party of Korea has settled on resuming discussions on a special comprehensive real estate tax (Comprehensive Real Estate Tax, 종부세) bill during the regular National Assembly session, which temporarily raises the tax threshold from 1.1 billion KRW to 1.4 billion KRW. Initially, there was an expectation that the ruling party would reach an agreement by the end of this month, but the situation reversed within a day.

According to political circles on the 30th, the Democratic Party has shifted its position to re-discuss the 종부세 special bill during the September regular session of the National Assembly. It was initially expected that the ruling and opposition parties would reach an agreement by the end of this month, leaving only the legislative process for the bill’s passage, but the Democratic Party is now returning to a policy of fully re-examining the 종부세.

The Democratic Party views the special deduction of 300 million KRW for 종부세 as excessively high and the 60% fair market value ratio as set too low, thus requiring further discussion. They also consider the 종부세 reduction for owners of low-priced local houses with an official price below 300 million KRW as a significant benefit that needs adjustment. The parts agreed upon by both parties include cases of temporary two-homeowners where one home is inherited and the deferral of 종부세 payment for elderly taxpayers.

Yang Kyung-sook, Democratic Party deputy floor leader and member of the National Assembly’s Planning and Finance Committee, said at the party’s floor strategy meeting, "Following a substantial corporate tax cut, the People Power Party is ignoring supplementary legislation on the 종부세 law and insisting only on additional special deductions for the wealthy, which is a tax cut for the rich." She added, "The Democratic Party finds it difficult to accept the 300 million KRW additional deduction for 종부세 as it is a clear tax cut for a minority of the wealthy." Kim Sung-hwan, a former policy chief of the Democratic Party, also hinted in a radio interview that "Since the 종부세 will be imposed in November, it is not impossible to handle it in September," indicating that the bill would be discussed during the September regular session rather than passing on the plenary session on October 1.

On the same day, a meeting between the ruling and opposition party floor managers of the Planning and Finance Committee to discuss the 종부세 law did not take place. A People Power Party Planning and Finance Committee official said, "There was a floor meeting in the morning, so it was difficult to meet with the opposition floor manager," adding, "We plan to exchange opinions in the afternoon." A Democratic Party Planning and Finance Committee official forecasted, "The deadline for scheduling a full committee meeting has passed today, and even if a full committee meeting is held tomorrow morning, it will take physical time for passage through the Legislation and Judiciary Committee, making it difficult to submit the bill to the plenary session on October 1."

Ryu Seong-gul, a People Power Party member and floor manager of the Planning and Finance Committee, attended the floor strategy meeting at the National Assembly and said, "The Democratic Party and the Moon Jae-in administration at the time tried to calm the public by issuing press releases promising to ease the 종부세 burden on single-homeowners," adding, "The current plan is not much different from what the Democratic Party proposed last March, so I don’t understand why it is now being called a tax cut for the rich."

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