Property Tax Revenues Quadrupled Under Roh

During the last four years under the Roh Moo-hyun administration, taxes related to real estate grew by 66 percent under the current government. In particular, property taxes increased 3.8 times and capital gains taxes increased 3.2 times.

An analysis carried out by Grand National Party assemblyman Lee Han-gu based on documents he gathered from relevant ministries, such as the Ministry of Finance and Economy, showed that taxes related to real estate rose by 65.9 percent from 19.6 trillion won in 2002 before the establishment of current administration to 32.5 trillion last year. Such a rate of increase is more than twice that of Korea’s gross tax revenue over the same period (32.4 percent).

By category, property tax revenue grew 3.8 times, from 817.5 billion won in 2002 to 3.109 trillion won last year.

Gift tax revenue grew 3.3 times from 458.3 billion won to 1.5216 trillion, and capital gains taxes grew 3.2 times from 2.4571 trillion won to 7.9205 trillion won. Real estate tax revenue, which embodies property taxes and comprehensive real estate holding taxes, grew 1.9 times from 3.8897 trillion won to 7.4404 trillion won.

Out of Korea’s gross tax revenue, the proportion of taxes related to real estate grew from 14.4 percent in 2002 to 18.1 percent in 2006. The sum of revenue from taxes related to real estate from 2003 to 2006 amounted to 100.6 trillion won.

“It’s because numerous development policies over the past four years caused real estate prices to rise and because the government tried to stabilize the real estate price by means of taxes rather than eliminating fundamental reasons,” explained Lee regarding the rapid increase in tax revenue.

In fact, the price of land in South Korea based on the sum of Officially Assessed Individual Land Prices (OAILP) rose by 1.3655 quadrillion won from 1.5458 quadrillion won in 2002 to 2.911 quadrillion won. The price per pyeong rose by 87.2 percent from 56,000 won to 105,000 won.

imsoo@donga.com