Aggregate Land Tax Raised by an Average of 28 Percent

The aggregate land tax (ALT) has increased by an average of 28.3 percent nationwide this year. Each taxpayer now has to pay roughly 25,000 won more than he or she did last year.

On October 11, the Ministry of Government Administration and Home Affairs announced that this year’s ALT was set at 2.1168 trillion won, which exceeds last year’s figure by 466.9 billion won. As a result, the amount of tax imposed on each taxpayer has risen to 129,000 won.

The increase is due to this year’s rise in the applicable rate of standard tax amount by 2~5 percent, as well as last year’s rise in the officially assessed individual land price (OAILP) by an average of 12.3 percent.

The ALT is a tax imposed on those who possess land as of June 1 of each year. It is levied in October, according to the sum total of taxable land owned by property owners across the country.

The tax amount is determined by the following formula: land value (OAILP x applicable rate of standard tax amount) x tax rate (determined in proportion to the land value). The OAILP is based on the figure announced by the Ministry of Construction and Transportation in the previous year.

Among the 16 cities and provinces, the city with the highest margin of increase is Seoul, where the ALT has risen by 39.5 percent following a 25.7 percent rise in the OAILP.

Within Seoul, the ALT for Yangcheon-gu, where the OAILP has risen by a particularly large margin, has soared by as much as 51.8 percent. In Songpa-gu, Seocho-gu, and Gangnam-gu, the ALT has increased by 50.2 percent, 49.4 percent, and 47.2 percent respectively due to the rise in land value, despite the fact that the applicable rate of standard tax amount has risen by only two percent, the lowest among those set by the Ministry of Government Administration and Home Affairs.

Paju-si, Ansan-si, and Hanam-si in Gyeonggi Province, where land value has escalated dramatically as a result of large-scale building site developments and an increase in the number of factories, have seen tax raises of 48.2 percent, 47.4 percent, and 45.3 percent each.

The Ministry of Government Administration and Home Affairs explained that “unlike property tax, which was raised to resolve regional differences, the ALT was raised in accordance with rising land prices,” and predicted that it is “unlikely to provoke the kind of resistance caused by property tax increases.”

Hyun-Doo Lee ruchi@donga.com