Posted May. 28, 2005 03:53,
The purchase tax rate, including the real estate acquisition tax and the property registration tax, will be reduced further after tax cuts of this January. A supplementary budget will be drawn up based on the economic situation in the second quarter of this year (April June).
In an extended party-government consultative conference held yesterday morning, the government and the Uri party, led by Uri Party Floor Leader Chung Sye-kyun and Deputy Prime Minister and Minister of Finance and Economy Han Duck-soo, reached an agreement on the agenda. The additional decrease of the purchase tax was intended to counter the mounting tax burden on real estate as the tax base is increased and the market price-based tax rate is more widely applied, leading to a steep increase in the overall tax rate.
Lee Jong-kyu, Director General for Tax Affairs at the Finance Economy Ministry, said that the timing and the level of decrease were not yet decided. The real estate industry expects the purchase tax to be lowered within this year.
The transfer income tax base and system will also be adjusted to avoid excessive increases, as the tax will be levied based on market prices.
Regarding the transfer income tax, Lee said that the proposal will be made as early as next year, considering the complex process of the transfer income tax system adjustment.
The government and the ruling party also agreed to seriously consider a supplementary budget as the economic growth rate for the first quarter (January March) was mere a 2.7 percent, far lower than expected.
Director Lee Seung-woo of the ministrys economic policy bureau said that a supplementary budget could be compiled even before August, when the official economic growth rate for the second quarter is released, considering the overall economic trend and index, suggesting the possibility that a supplementary budget could materialize in June or July of this year.