[Editorial] Revision of Real Estate Law Urgent

The Constitutional Court ruled unconstitutional yesterday imposing the comprehensive real estate tax on a long-term owner of a single home who cannot pay the tax. Since a home is essential to the pursuit of happiness, selecting a measure to stabilize housing prices must be handled based on constitutional standards, the ruling said. Thus ends the punitive tax system of taxing homes worth more than 600 million won (431,000 U.S. dollars) that began in 2005.

The court cited “a certain period of time” to determine whether the owner of a single home is exempt from the comprehensive real estate tax, allowing the National Assembly to make specific rules. The court’s news release described it as “long-term homeowners,” but given that people move frequently for jobs or their children’s education, the term should not be too long when revised.

While taxpayers were waiting for the ruling, the National Tax Service released this year’s tax bill, urging them to pay their taxes by the end of the month. Though the court ruled the tax unconstitutional, it ordered the temporary implementation of current tax law. Not much time is left because taxpayers can be rescued only when the National Assembly revises the law.

Dozens of construction companies are expected to go bankrupt due to the increasing number of unsold houses in the provinces. Though the ruling does not apply to those owning more than one home, it is worth considering granting the tax exemption for multiple homeowners who have homes in the provinces, which have little worry over speculation. The court ruled against charging the real estate tax to married couples, following previous rulings that married couples should not be discriminated against. This reflects the irrational legislation passed by the previous Roh Moo-hyun administration.

Despite pressure from the main opposition Democratic Party to uphold the tax, the rational ruling by the Constitutional Court is worth of appreciation. Five of the nine justices were either recommended by the former ruling Uri Party or named by former President Roh. Since the court voted 7-2 against the tax, the Democratic Party must accept the ruling and help quick revision of the law.