Deputy Prime Minister Han: Revision of Capital Gains Tax to Become Effective

On May 13, Deputy Prime Minister and Minister of Finance and Economy Han Duck-soo said, “Even if a revised bill on the real estate brokerage law that stipulates a provision that one should report the actual transaction price when one purchases or sells a real estate is not passed by the National Assembly, a capital gains tax will be levied on the assessment of the actual market price starting in 2007, as prearranged.”

During a regular briefing on the same day, Deputy Prime Minister Han said, “Unless the real estate brokerage law is revised, though an additional cost is required, the government can convert the taxation standard of the capital gains tax to the actual transaction price as the National Tax Service (NTS) has prepared for it.”

Regarding one household owning three houses or high-priced houses of over 600 million won, since the government has already imposed a capital gains tax on them by applying the actual transaction price, even though the current bill on the real estate brokerage act is not reformed, it is possible to levy a capital gains tax on them by the actual market price through an enlarged application of a price inspection system of the NTS.

Concerning the possibility of a revised bill on the income tax law that is designed to convert the taxation standard of the capital gains tax to the actual transaction price to be passed in the regular session of the National Assembly in 2006, Deputy Prime Minister Han was optimistic, saying, “Since the revised bill is aimed at actualizing the taxation standard, the political circles will agree to pass it.”

He showed skepticism regarding a plan to uproot real estate speculation by regulating loans for housing prices because of the difficulty in varying the size of the loan and conditions according to the number of houses that people who call for the money have held in actuality.

Meanwhile, he explained, “It is a basic principle to raise cigarette prices by 500 won starting in July, but if we come to a conclusion that it is difficult to increase it as prearranged after reviewing the prices, we will consult with the Ministry of Health and Welfare to decide a specific date.”

legman@donga.com