The Democratic Party and the government are entering final coordination to finalize a second-half tax reform plan that includes real estate. The goal is to complete the details of a government proposal narrowed down through two rounds of "grand real estate debates."
According to political sources on the 27th, the Democratic Party will hold a closed-door party-government meeting at the National Assembly at 8 a.m. on the 30th to discuss the second-half tax reform plan. From the National Assembly, lawmakers belonging to the party's Policy Committee and the Fiscal and Economic Planning Committee will attend, while the government side will include Koo Yun-cheol, Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance, along with related officials. A Democratic Party lawmaker on the National Assembly's National Policy Committee said, "We plan to discuss matters related to real estate policy with the government."
The biggest point of contention is the real estate tax reform plan. The government is currently giving strong consideration to shifting the comprehensive real estate tax standard from the number of homes owned to the combined value of housing assets, and to calculating an appropriate holding tax by differentiating the tax burden on single-home owners. Detailed discussions between the party and government are also expected on the criteria for ultra-high-priced homes, the gradual strengthening of the holding tax, and the easing of transaction taxes.
Currently, various opinions are emerging within the Democratic Party over the direction of real estate tax reform. Regarding raising the holding tax on ultra-high-priced homes, Democratic Party lawmaker Lee Eon-ju said, "Since the effective tax rate is low, it could be done, but the transaction tax should be cut significantly." She added, "We need to add supply measures, implement the ones already presented as much as possible, and reexamine demand-suppression measures overall from scratch."
Democratic Party lawmaker Jin Sung-joon proposed, "There is a need to consider unifying the property tax and the comprehensive real estate tax." Kim Yong, former vice president of the Democratic Research Institute and a candidate for supreme council member at the August 17 party convention, also said on SBS Radio, "We should not increase the holding tax any further."
Political circles view that this tax reform plan will have a significant impact not only on the real estate market but also on the future political landscape. In particular, since real estate taxation is directly tied to public sentiment, the government and ruling party have no choice but to agonize over the level and pace of the reform. President Lee Jae-myung recently said, "(The housing price issue) is a problem that will eventually explode, and if it does, it will be fatal," adding, "I think we must prepare for it even if it means taking a political loss."
