Posted May. 10, 2005 23:35,
There is growing anger among apartment residents as taxes on apartments suddenly rose by as much as 50 percent while household incomes remain flat or even lower amid the slow economy. As much as 70 percent of apartments in Seoul were imposed an increase of 50 percent in taxes. On the other hand, property taxes on individual and detached houses fell 14 to 28 percent. It is only natural that apartment residents feel that they were shortchanged.
It is possible that a person who bought his or her house to actually live in would earn profit from selling the house due to a price hike. If the government considers the earnings as speculative profit and imposes high property taxes and capital gains taxes, it would give rise to a large number of innocent victims. The governments goal of curbing real estate speculation is worth pursuing. Still, the government should not undertake a policy that labels even legitimate single-home owners as speculators.
President Roh Moo-hyun has recently said in a national affairs meeting, All the profit created in the housing market should be shared by the public. A house is often the entire amount of assets to those in the middle or lower income brackets. The presidents idea is that all of society should share the profit from housing prices by imposing high taxes on the houses that the middle class bought through their lifelong hard work. It is questionable if the idea can be interpreted as social equity. The governments idea is to recognize as private property the speculative earnings in the foreign exchange and stock markets, but share the profits from the real estate market, which would prove a violation of the constitutional right to private property.
It is right to levy high taxes on a large chunk of profits from real estate speculation or those who own too many houses. However, it is wrong to impose regulations befitting to immoral speculators on single-home home owners only because the price of their houses rose, regardless of how the profit was earned.
Some say that the governments real estate policy is based on the philosophy of Henry George, a late 19th-century economist, who argued, The government should collect all the revenue from the land in the form of taxes. The architect of the governments real estate policy is Lee Jung-woo, the presidential policy coordinator. He formed a research group on Henry George as a professor of Kyungbook National University and does not deny the scholars influence on his idea. However, it is also questionable if it is reasonable to apply the 19th-century scholars idea to Koreas real estate measures of today.
The government should give a second thought to the planned hike of apartment tax. Apartment residents are neither speculators nor sitting ducks.