[2025 Audit] Koo Yoon-chul: "Real Estate Policy Focuses on Supply... Reviewing Tax Reforms Including Property Holding Tax Increase"

Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-chul stated on the 14th that internal reviews are underway regarding tax reforms, including an increase in property holding taxes, and that final decisions will be made after considering the current market’s tax sensitivity. He made it clear that the focus of real estate policy is not on suppressing demand through taxation to control prices, but on maintaining appropriate prices by increasing supply.

Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-chul is responding to lawmakers' questions at the National Assembly's Planning and Finance Committee audit held on the 14th. 2025.10.14 Photo by Kim Hyunmin

"We Are Aware of the Issues with the 'One Smart Home' Trend"

At the National Assembly's Planning and Finance Committee audit on the morning of the 14th, Deputy Prime Minister Koo responded to concerns about excessive tax deductions for single-home owners and the continued concentration of funds into select properties due to an overheated asset market. He said, "We are fully aware of the issues in those areas."

Regarding the suggestion to levy taxes based on the value of homes rather than the number of homes owned, Deputy Prime Minister Koo commented, "If I own one house worth, for example, 2 billion won, and someone else owns three houses worth 500 million won each, totaling 1.5 billion won, we need to consider such aspects as well."

He added, "There are various factors that determine housing prices. If it is a single house I live in, and it does not generate any income, imposing excessive taxes raises further issues." He continued, "If someone has lived in the same house for 20 to 30 years, we will study and seek public consensus before reducing deductions."

He reiterated that the emphasis of real estate policy is on maintaining appropriate prices by increasing supply. Deputy Prime Minister Koo said, "The focus of real estate policy is not on managing prices by suppressing demand through taxes, but on maintaining appropriate prices by increasing supply."

Regarding real estate tax reform, including the increase in property holding taxes, he stated, "We are in constant communication with the Presidential Office." Deputy Prime Minister Koo explained, "We are always considering how to operate real estate tax policy efficiently and are continuously reviewing tax reforms." However, he clarified, "Although internal reviews are ongoing, the market is highly sensitive to tax changes. Nothing has been finalized yet."

Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-chul is responding to questions from lawmakers at the National Assembly's Planning and Finance Committee audit held on the 14th. 2025.10.14 Photo by Kim Hyun-min

"The Idea That Lowering Corporate Taxes Increases Investment Is Classical"

In response to opposition lawmakers' claims that raising corporate taxes could reduce companies' investment capacity, Deputy Prime Minister Koo countered, "The idea that lowering corporate taxes leads to increased investment is a classical argument. Companies will invest, even by borrowing, if they expect higher returns."

He added, "This is not about raising corporate taxes, but about normalizing the rates that were lowered by the previous administration. By partially normalizing the rates, we will use the additional revenue to further increase support for specific sectors."

Previously, the government announced plans to raise the corporate tax rate by 1 percentage point across all tax brackets. The top corporate tax rate was reduced from 25% to 22% under the Lee Myung-bak administration in 2009, raised back to 25% under the Moon Jae-in administration in 2017, and then lowered again to 24% under the Yoon Suk-yeol administration to stimulate corporate investment.

When asked about the need to reform inheritance tax, such as expanding the spousal deduction limit, Deputy Prime Minister Koo responded positively, stating, "We will discuss this during the National Assembly deliberations."

Regarding fiscal rules, he emphasized, "Operating fiscal rules on a single-year basis could result in a lack of flexibility during periods of transformation like now. We need to consider fiscal rules or measures to maintain fiscal soundness that are suitable for Korea." This suggests an intention to abolish the legal requirement that limits the managed fiscal deficit to 3% and to adjust the application criteria more flexibly.

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