"Punishment of non-residents", "Goal of housing stability"... Experts also have differing opinions on real estate taxation

Public hearing held by the Ministry of Finance and Economy on the real estate tax reform plan

(Seoul = Yonhap News) Reporter Jaeha Park = At the public hearing on the government tax reform plan held on the 3rd by the National Assembly's Finance and Economic Planning Committee, experts gave mixed evaluations on the transition to a real estate tax system centered on actual residence.

There appears to be a conflicting opinion that the reform plan, which focuses the tax burden on non-residential homeowners, violates the principles of fair taxation, and that the plan to change the real estate tax base from ownership to residence is in line with the trend of normalizing taxation.

Kim Woo-cheol, president of the Korean Society of Finance, who gave a statement on this day, criticized, "The government described this real estate tax reform plan as a 'fair tax reform,' but it is very difficult to justify," adding, "Punitive taxation of non-residents is a major change in standards, but there was no announcement of research service results or policy public hearings on this."

Chairman Kim pointed out, "If it is the same house, there is no difference in property benefits between residence and non-residence," and "the fact that the government makes exceptions for reasons for non-residence such as transfer, school attendance, or nursing care means that it cannot be an indicator of the power of the government."

Kim In-man, head of the Real Estate Economic Research Institute, defined this real estate tax reform plan as "an experiment in the state's tax violence against the people," and said, "Excess tax revenue is said to be about 60 trillion won this year and 100 trillion won next year, but the question remains whether 2 to 3 trillion won more should be collected in comprehensive real estate tax."

He continued, “The goal of real estate policy is to stabilize housing for the common people, but now, on the contrary, rental properties are disappearing and monthly rents are soaring.” He added, “It is normal to lower the acquisition tax and transfer tax when the property tax is raised, and only then will there be a lot of properties for sale and help stabilize the housing market.”

On the other hand, there was also a counterargument that the real estate tax reform direction currently being promoted by the government is reasonable.

Kang Seong-hoon, a professor of policy at Hanyang University, said, "This reform plan is to focus on housing value and actual residence status rather than the number of housing units. It is evaluated positively in that it more appropriately reflects the taxpayer's burden power and takes into account the policy goal of housing stability."

However, he expressed a cautious stance, saying, “There is a possibility that part of the burden of property tax may be passed on to tenants through rent, and it may also affect the composition of monthly rent in the real estate market,” adding, “There is a need to maintain tax fairness and predictability of the system.”

Oh Jong-hyun, director of the Korea Institute of Public Finance, also explained, "The current real estate tax system has different tax rates depending on the number of houses, so even if you own a house of the same value, the tax burden is different, so there is a gap in the tax burden," and added, "The government plan is a measure to correct this, and I agree with its direction."

He also suggested, “As the housing market is also influenced by supply and financial conditions, it is realistic to comprehensively look at changes in rent and transaction volume in the process of gradually implementing (the reform plan) and supplement where necessary.”