Cho Kuk, head of the Innovative Policy Institute at the Rebuilding Korea Party, said what the Democratic Party of Korea and the government protected in revising the comprehensive real estate holding tax overhaul was "the interests of the top 1%."
Cho made the remarks in a Facebook post on the 2nd, saying the government "ultimately accepted the Democratic Party's political demands 29 days after announcing the tax reform plan."
The government had earlier pushed to lower the basic deduction under the holding tax for owners of a single home they do not live in to 900 million won from 1.2 billion won. It reversed course to 1.2 billion won after the Democratic Party, worried about a public backlash, pressed for the change. The cap on tax increases will also stay at the current 150% rather than the 200% in the government's original plan. The basic deduction for owners living in their single home, by contrast, was raised to 1.4 billion won from 1.2 billion won.
Cho said the deduction for owners of a single home they do not occupy "stays the same as it is now," adding that "far from strengthening taxation on those owners, this only narrows the pool of people subject to the tax at all."
"Of the 15.976 million homeowners nationwide last year, only 3% paid the holding tax, and narrowing that to single-home households brings the share down to about 1%," he said. "The Democratic Party has called itself the party of the middle class and ordinary working people, but what the party and the government protected with this decision is the interests of the top 1%."
Cho argued the tax should be assessed on the value of assets held rather than on whether the owner lives in the home. "The essence of the holding tax introduced under the Roh Moo-hyun administration is fairness," he said. "Its purpose is not to raise revenue but to achieve equitable taxation."
"If someone owns multiple homes or a high-priced home, we should demand a tax burden commensurate with that benefit — in other words, social responsibility," he said. "Whether the owner lives there should not be the standard for taxation. The value of the assets held should be." He also asked whether "it is right to abandon the principle of taxation in order to accommodate owners of expensive single homes who find it hard to live in them."
He predicted the revision would also weaken the plan's effect of encouraging sales of expensive homes. "Distressed listings of high-priced homes in the Gangnam area were increasing under the government's original plan, and that flow will now recede as well," Cho said. "Had the original plan held, owners of expensive single homes who lease them out under jeonse rather than living in them would have chosen either to sell or to move in themselves. Now the reason to do so has weakened."
Cho said the government and the ruling party had backed away from the principle of taxation with an eye on elections. "If the government had set a clear goal of equitable taxation and property reform, it should have pushed the principle of taxation through with resolve while also carrying out its all-out supply policy," he said. "This U-turn amounts to folding on the principle of taxation out of fear that it would hurt the party in the 2028 general election."
"I hope the Democratic Party and the government will at least stay faithful to the interests of the people who gave them their votes in the last general election and presidential election," Cho said. "Do you think owners of expensive single homes they don't live in, whose tax burden has been cut, will be grateful for this retreat and back the Democratic Party and the government? This U-turn may only cost them the goodwill of the voters who supported them."
