Major Parties Agree to Cut Capital Gains Tax

The conservative Grand National Party and the liberal United New Democratic Party agreed yesterday to pass a bill on cutting the capital gains tax for homeowners who have owned one house for a long time.

At the extraordinary National Assembly session next month, both parties will also seek an additional tax cut of 13 percent for oil for a combined reduction of 30 percent.

The agreements were made by the policy chairmen of both parties at the Federation of Korean Industries in Seoul.

Under a plan presented by the GNP, homeowners will see their capital gains taxes reduced based on the number of years they have owned their homes. Those owning a house for three to five years will get a tax cut of 20 percent; five to ten years 40 percent; ten to 15 years 60 percent; 15 to 20 years 80 percent; and 20 or more years 100 percent.

The UNDP’s plan, however, is a little different. People who have owned their homes for three to four years will get a tax cut of 12 percent. Then the deduction increases four percentage points per year, with a maximum rate of 80 percent for 20 years.

Both chairmen said the passage of a bill will not be difficult because of no big difference between the two plans. As for transaction taxes on home sales such as those of acquisition and registration, they agreed to reduce the rates to one percent from two percent.

They have yet to decide the timing of the passage, however, with the UNDP seeking February and the GNP saying methods to offset declines in revenue should come first.

sunshade@donga.com