The Democratic Party of Korea is pushing to create a new "local housing welfare tax" worth about 1.5 trillion won ($1.1 billion) a year to fund housing welfare programs run by local governments. The plan would convert the local education tax levied on cigarette consumption taxes, which expires at the end of this year, into a housing welfare revenue source. The party also envisions expanding public rental housing from the current 1.94 million units to 2.5 million and broadening tailored supply for groups such as young adults, newlyweds and older adults.
The party's special committee on housing welfare held a preparatory meeting on the 17th at the National Assembly Members' Office Building to discuss this policy direction. Lawmakers Kim Nam-keun, Oh Ki-hyoung, Heo Young and Yeom Tae-young attended.
Kim Nam-keun, who chairs the committee, said housing problems in Seoul and the surrounding metropolitan area are more serious than at any time in recent memory, creating strong demand for the committee's work. "The government is also expected to announce a separate housing welfare road map soon, and the committee will review the policy road map together with the government," he said.
The committee plans to focus in particular on expanding housing supply for vulnerable groups, including young adults, newlyweds and older adults. "We will discuss how to handle housing for young adults and newlyweds and how to supply senior housing, and we plan to gather a range of views on issues such as housing vouchers through meetings with housing welfare organizations," Kim said.
Oh Ki-hyoung, the ruling party's liaison on the National Assembly's Strategy and Finance Committee, stressed the need to expand public rental housing and secure the revenue to support it. "Over the long term, public rental units need to account for at least 20% of the entire rental market, and we need to draw up the supply plan required for that," he said. "We have to raise corresponding revenue, and this should be reflected from the point we manage this year's budget bill."
The committee decided to discuss with the government a plan to create the local housing welfare tax so that local governments can pursue housing welfare projects on a stable footing. The mechanism would convert the local education tax levied on cigarette consumption taxes, which expires at the end of this year, into a housing welfare revenue source. Of the roughly 3.5 trillion won in annual cigarette consumption taxes, about 1.5 trillion to 1.6 trillion won currently flows into the special education accounts of metropolitan and provincial governments as local education tax.
Meeting reporters after the session, Kim said the government side had reported that part of the cigarette tax is collected as local education tax and that, given the severity of housing welfare problems, it plans to convert this into a housing welfare tax. Yeom Tae-young said there was a shared understanding on establishing a locally centered delivery system for housing welfare. "The idea is to create a local housing welfare tax, assign dedicated housing welfare staff at local governments and push for budget support," he said.
Along with a quantitative expansion of public rental housing, the committee is also pursuing a shift from the existing supplier-centered policy to one tailored to users. The goal is to increase public housing from about 1.94 million units now to 2.5 million, or about 10% of the total housing stock. Over the longer term, the committee will also discuss raising the share of public rental housing in the overall rental market to more than 20%.
"The main point is shifting public rental housing policy, which has been supplier-oriented, toward users," Kim said. "Since middle-class young adults face considerable housing difficulties, we can expand general-type public rental housing with good locations and quality and with communities tailored to young people."
Fiscal resources will also be concentrated on housing aimed at young adults, newlyweds and older adults. Heo Young, senior deputy chair for social affairs on the party's policy committee, said housing supply backed by government fiscal spending is urgently needed, especially for youth housing and senior housing where people can begin a second life after retirement. Oh also stressed the need to discuss using the youth portion of the future response fund to expand housing supply for young adults and newlyweds.
The committee is also pursuing quality improvements for aging public rental housing. Under the plan, public rental units about 15 years past completion would be remodeled, while those more than 30 years old would undergo high-density rebuilding to improve living conditions while also increasing supply. The committee is reviewing ways to diversify housing suppliers to include social cooperatives and social enterprises.
Support will also expand for people in vulnerable housing, including those in single-room districts, gosiwon (small subdivided rental rooms) and semi-basement homes. Subsidies for maintenance fees and support for installing air conditioners in households vulnerable to extreme heat are among the items under discussion. The committee also plans to consolidate scattered support functions around local housing welfare centers and strengthen the housing welfare delivery systems of metropolitan and basic local governments.
Going forward, the committee plans to visit sites such as senior housing, social housing and supportive housing that helps vulnerable people live independently once a month, gather views from housing welfare organizations and flesh out detailed policies linked to the government's housing welfare road map.
