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S. Korea needs to review its property tax system, says IMF

S. Korea needs to review its property tax system, says IMF

Posted March. 30, 2022 07:58,   

Updated March. 30, 2022 07:58


The International Monetary Fund (IMF) recommended that South Korea needs to review the effect of its real estate tax system, including the comprehensive real estate tax and real estate transfer tax, which has been tightened since the Moon Jae-in administration took office. It further advised the South Korean government to tightly regulate household lending that shows the signs of mitigation.

The IMF released the 2022 Article IV Consultation report on Tuesday. In the analysis of household debts and real estate policies of South Korea, the IMF stated that South Korea should review the property tax system and introduce stronger incentives for private entities to supply more housing. The recommendation from the IMF can be understood that homeowners are shouldering heavier tax burdens because of tightened home ownership taxes and real estate transfer taxes that the government has adopted to cool down the overheated housing market, leading to limited housing supply, and therefore that the government needs to examine the need for real estate tax reform.

The IMF eval‎uated that the pace of normalization of monetary, fiscal, and financial policies is appropriate. However, it recommended that South Korea must take audacious measures when the possibility of stagflation starts to actualize.

The IMF forecasted that South Korea’s economic growth rate would be 3 percent this year, the same as the World Economic Outlook update figure. Due to rising interest rates, stabilizing energy prices, and recovery of supply chain, the IMF estimated that South Korea’s inflation rate would be 3.1 percent this year and 2.1 percent next year, respectively.