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Controversy Over New Real Estate Measure

Posted November. 10, 2005 03:34,   


Controversy over the special bill on infrastructure allotment, one of the August 31 Comprehensive Real Estate Measures, is heating up.

The Expert Office under the Construction and Transportation Committee of the National Assembly has begun to point out a possibility of the government executing the bill arbitrarily, and residents associations for reconstruction and construction firms are opposed to the bill, insisting that its introduction will lay more burdens on the public.

Ahn Byeong-ok, the chief expert (at the deputy vice minister level) of the Construction and Transportation Committee of the National Assembly, said that there is room for the government to execute discretionary infrastructure allotments similar to quasi-taxes in a report titled: “The Review of the Special Bill on Infrastructure Allotment.”

Ahn said that despite the fact that the infrastructure allotment system is parallel to a quasi-tax, putting the subject of taxation and the assessment standard under a presidential decree and Construction and Transportation Minister’s announcement was not proper.

The bill is currently being deliberated by the committee.

“Given that if the infrastructure allotment system is in place, along with the revival of the development allotment system next January, it might dampen investor volition on development projects and pass a hike in costs to ordinary people, these side effects should be reviewed in accordance with the bill’s enforcement,” said Ahn.

This report estimated that the government would levy 30 million won per household in infrastructure allotments on 30 pyeong reconstruction apartments in Gangnam, Seoul.

The Construction and Economy Research Institute of Korea recently announced that if the infrastructure allotment system is in place, when one buys an apartment with 32 pyeong (floor area of apartment unit of 25.7 pyeong), one should pay 16.17 million won more per household, and one should pay 79.57 million won more for buying a shop 10 pyeong in size in Myeong-dong, Jung-gu, Seoul.

The National Association for Right Reconstruction Practices held an emergency meeting yesterday, saying, “Given that if the special bill on infrastructure allotment is passed, we will be forced to shoulder an additional burden that we cannot afford to pay, we will do everything we can to block the passage of the bill.”

In response, ruling Uri Party lawmaker Jung Jang-sun, who proposed this bill, said, “If many point out that this system imposes heavy taxes on the public, we can lighten the burden partially in the process of enacting the bill,” adding, “We are planning to gather various opinions on the bill at a public hearing slated for November 11.”

Seung-Heon Lee ddr@donga.com