Official Land Prices May Rise to 91 Percent of Market Price

It is forecasted that in the government’s announcement of nationwide official land prices on May 31, the official land price will be considerably increased to 91 percent of the market price.

Accordingly, as it is anticipated that various taxes, including the land property tax and local health insurance fees, will rapidly increase, the government is preparing countermeasures in case of a tax revolt.

On May 12, the Ministry of Construction and Transportation (MCT) sent an official correspondence to the Ministry of Finance and Economy, the Ministry of Government Administration and Home Affairs, and the Ministry of Health and Welfare stating, “Due to the rapid increase in this year’s official land price realization ratio (the official land price divided by the actual price), property taxes related to land, and local health insurance fees that are assessed on this basis are also expected to increase,” and requested countermeasures to decrease the burden.

According to the MCT, the official land price realization ratio in 2002 was 56 percent. In 2003, it was 67 percent, last year it was 76 percent, and this year, it made a significant leap to 91 percent.

Additionally, when imposing last year’s land property tax, the official land price of 2003 was used, but since related regulations have changed, and the official land price of 2005 must be used, the increase of official land price over two years will be reflected at once.

Sang-Rok Lee Jae-Seong Hwang myzodan@donga.com jsonhng@donga.com