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“If You Can’t Afford To Own It, Sell It.”

Posted March. 16, 2007 07:06,   


Kwon O-kyu, deputy prime minister and minister of Finance and Economy, had a joint press conference with the Ministry of Finance and Economy, the Ministry of Government Administration and Home Affairs, and the National Tax Service on March 15.

He said, “The government has no plan to increase the base level for the comprehensive real estate tax and exempt elderly or single homeowners from the taxation. Some criticize that the new property tax will cost homeowners too much or argue that the government should adopt tax reduction measures or if a single homeowner wants to sell his house to lower the tax but can’t find anyone, the owner can`t afford to pay the bill and it will be too harsh. However, we can`t accept such criticism because we simulated what will happen if the new tax regime is in effect and the result says single homeowners don’t have to pay much.”

He added, "Owners of the high-priced apartment units in Seoul’s Gangnam area have a choice to lower their tax: selling their home and moving to the Bundang area where living conditions are similar to those of Gangnam’s. As Bundang’s housing price is lower than Gangnam’s, the owner could get lots of money in return. The government will not change the newly implemented tax regime.”

However, his remark has caused a stir. To those who have trouble paying the tax as the property holding tax increased in Gangnam especially, the minister said homeowners could sell their houses and move to other places, which is quite annoying.

Mr. Kwon added, “We will not exempt single homeowners, long-term holders or retirees from taxation, allow them to delay payment, and we will cut holding, acquisition and registration taxes of real estate for them.”

The government estimates the taxpayers who should pay the comprehensive real estate tax on land and houses will show a 48% increase from 341 thousand households to 505 thousand households. (The figure 341,000 is on the basis of voluntarily reporting by homeowners last year.) Among 505 thousand, 381 thousand are individual taxpayers and this makes up 3.9% of the 9.71 million households.

The government will collect 2.88 trillion won in comprehensive real estate taxes, a 68% increase from last year’s 1.72 trillion won. And except land, the real estate tax on houses will soar by 143%, from last year’s 522.2 billion won to 1.27 trillion won.

Real estate owners who don’t need to pay the comprehensive real estate tax should pay more taxes anyway as the total property tax will escalate to 3.15 trillion won, an 18% increase from last year.

Under the circumstances, homeowners in high-priced apartment complexes are considering filing complaints about the taxation, saying they will resist paying the tax if the government pushes ahead with the plan. But lots of citizens criticize such actions as irrational.

Some worries that the newly implemented tax regime is likely to widen the gap between the haves and the have-nots.

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