[Editorial] Inordinate Real Estate Taxes

A retiree in his 60s has been living in an apartment in Apgujeong-dong, Gangnam-gu of Seoul for 27 years since the apartment buildings were built in 1979. He is about to face a financial crisis as he will have to pay property holding taxes of more than $1,000 a month, although his fixed income is $2,100 a month. Moving to another neighborhood away from children, old friends, and the church or the temple that one has been attending for a long time is a very stressful thing for many elderly. Relocating is nonetheless easier for middle-aged people, as it is usually directly related to their children’s schools and their work.

This helps explain why civil workers who are paid with taxpayers’ money should not mockingly tell them to “move out unless you can afford to pay the property holding taxes that have swelled three-fold all at once.” However, Finance Minister Kwon O-kyu made an upsetting remark, saying, “If you sell your house and move to Bundang, you can secure a considerably large sum of cash.” However, Bundang is also one of the seven districts whose real estate prices are the most-overpriced nationwide and where a large portion of its residents are also subject to the comprehensive property taxes. Kwon’s remark was, however, based on President Roh Moo-hyun’s recent remark, “If you move to another place because of property taxes, you will be left with a lot of money even if you pay 10 percent in transfer taxes.” Therefore, what Kwon did was simply repeat what President Roh said like a parrot out of loyalty. However, he is in effect no different from people screaming, “Fire!” while blocking the exits of a theater.

The initial objective of levying the comprehensive property taxes on the rich has vanished. Among the people who are subject to the comprehensive property taxes, 36.5 percent of them have only one house. An increasing number of residents in regional cities like Ilsan, Incheon, Busan, Daejeon and Gwangju are now subject to the comprehensive property taxes. Approximately 30 percent of those subject to the comprehensive property taxes have real-estate assets whose official values are between $630,000 and $735,000. In other words, those in the middle class who have worked hard while having only a single house have fallen victims of a punitive tax system drawn up to curb speculation. Although wealth should be redistributed through taxes to some extent, if the government imposes excessive taxes, it is no different than the plundering or the failed redistribution system of socialist countries.

The government is also squandering taxpayers’ money, which is upsetting the public. The Truth and Reconciliation Council has set aside $12.5 billion to investigate 9,154 cases. Moreover, it is planning to hire 130 more employees. The government has also poured more than $7 million to build the Administrative City Promotion Center and the Balanced National Development Promotion Center on desolate land in Yeongi-gun, South Chungcheong Province. However, only about 30 people visit the centers on average each day. Most of the visitors are either neighboring residents or related civil servants. There are just too many cases of wasting taxes to mention.

Of course, the government’s real-estate policy will never work in the market system even if it hit on people with excessive taxes. There are many people counting the number of days remaining in President Roh’s term.