[Editorial] Will the Comprehensive Property Tax be Effective?

The government has announced that it will reform the existing property tax by introducing a new Comprehensive Property Tax and increasing the taxation standards for asset tax and Comprehensive Land Tax. The current tax system, which has long been noted as being flawed, is in need of much improvement. However, the new tax measure should be reviewed further due to its possible setbacks.

The proposed Comprehensive Property Tax seems to be quite similar to the Excessive Property Ownership Tax in the past, which was found to be unconstitutional after causing much controversy. As long as the property tax and the Comprehensive Land Tax exist, the government-proposed Comprehensive Property Tax is unnecessary. The new tax, of which its purpose and characteristics are dubious, could face stiff opposition from taxpayers. On top of that, the idea that the central government will collect the new tax and distribute the revenue to local governments goes against the principle of regional empowerment. It would undermine the independence of local governments by making them more dependent on the central government.

More lamentable is the fact that the government-led measure lacks a blueprint to streamline the existing property price evaluation systems. The Ministry of Construction and Transportation, the National Tax Service and the Ministry of Government Administration and Home Affairs have set their own standard land prices. The different standards confuse taxpayers while draining much of the government`s energy. Thus, there should be open discussion to unify the taxation standards.

Although the government has pledged to reduce land purchase and registration taxes, its newly announced proposal does not contain any detailed plans for this. If the problem remains unresolved, the government will find it difficult to avoid criticism that it is interested only in taking money out of taxpayers` pockets.

One of the main purposes of the tax reform is to curb real estate speculation. Even before introducing the new measure, the government increased the capital gains tax and announced massive tax investigation plans to no avail. This clearly demonstrates that tax increases have little effect in cracking down on property speculators, and so the government should draw up property price stabilization measures that fit the principle of supply and demand.