Tax Burden for Real Estate Will Increase

The government decided to build 2.5 million housing and 500 thousand national leased houses in next five years to improve housing environment and to stabilize housing price.

The government also decided to introduce part time maternity leave system so women will be able to work as part timer for a certain period and foster children.

Government agencies such as Ministry of Finance and Economy (MOFE), Ministry of Education and Human Resource Development, Ministry of Health and Welfare (MOHW), Ministry of Construction and Transportation (MOTC), Ministry of Labor (MOL), Ministry of Gender Equality (MOGE) reported new policies of incoming government to President-elect Roh Moo-hyun on the 22nd at policy forums held by the Presidential Transition Committee (PTC).

The MOTC reported that it would build annually 500 thousand housing for next five years in Seoul and the Metropolitan area to stabilize housing price and it would lift up diffusion ratio of house to 110%. It also decided to simplify procedure for development into residential land to build 500 thousand national leased houses by 2007 and distribute them to 3.3 million citizens who are living in houses under the standard prior to others.

The MOFE reported to increase tax burden of those who have land or other properties by intensifying taxation and gradually practicing a standard of comprehensive land tax assessment which is currently about 20~25% of market price. Along with this, it also decided to introduce controversial comprehensive inheritance and gift tax.

The MOFE also plans to consider introducing “earned income tax deduction” which offer a deduction of certain rate for low-waged workers. When the deducted amount is bigger than the income tax paid by workers, the government will compensate the margin.

In addition, the MOFE decided to found a “Presidential commission on assessment of self-employment income (temporary title)” with the National Tax Service and the National Health Insurance Corporation to assess the exact income of self-employed such as lawyer, doctor and so on.

The MOHW and the MOGE decided to introduce a part time maternity leave system to let women be able to work as part timer for a certain period (about a year or two) and take care of their children. The government also plans to introduce a recruitment goal system to public corporations to interest women in economic activities.

According to the MOHW, 3.2 million families whose monthly fixed salaries are between one million Won and 1.2 million Won (standard: 4 member family) will be benefited for education expense and medical expense. The national pension will be extended to part-timers from this July and the unemployment insurance will be extended from next January. The MOHW also decided to give monthly subsidies (160 thousand Won) to the first and second grade physically challenged persons.

Joong-Hyun Park sanjuck@donga.com