Input 2021.02.15 14:55
Top-ranked burden rate compared to developed countries
I couldn’t achieve the purpose of introducing the tax
It was found that Korea’s real estate-related tax is ranked second by the Organization for Economic Development Cooperation (OECD) in terms of gross domestic product (GDP). In August of last year, President Moon Jae-in said, “The tax burden has been increased, but it is still lower compared to other advanced countries.” However, it is confirmed that the real estate tax burden of our people is higher than that of major countries in the world. President Moon was wrong.
Moreover, it was found that the government’s expansion of real estate-related taxes failed to achieve the promised purpose of redistributing wealth and stabilizing housing for the common people. In particular, it was analyzed that the inequality of real estate assets has worsened. Experts point out that the government’s real estate tax philosophy is wrong.
According to the ‘2020 Korea’s Real Estate Ownership Tax Estimation Report’ released by Rep. Gyeong-Joon Yoo, head of the Power of the People Real Estate Public Price Verification Center, the proportion of real estate ownership tax to GDP in Korea was 1.2% last year. The ratio of real estate ownership tax to GDP in 2016 was only 0.75% in 2016, but it gradually increased to 0.82% in 2018 and 0.92% in 19, and has increased sharply in 2020. As of 2018, it exceeded the average real estate ownership tax ratio of 1.07% in OECD countries.
In addition to the real estate ownership tax, real estate-related taxes such as transaction tax, gift tax, and capital gains tax have already been among the highest among OECD countries since 2018. In 2018, Korea’s’asset transaction tax’ was ranked 1st among OECD countries with 1.89% of GDP, and the ratio of’inheritance/gift tax’ was also 0.39%, ranking 4th among OECD countries. The proportion of the individual’transfer income tax’ to GDP is also ranked third with 0.95%.
Rep. Gyeong-joon Yoo said, “If all real estate-related taxes are reflected, Korea was a country that collects a high level of real estate-related taxes in 2018 (#3), and applying the increased real estate ownership tax in 2020, the proportion of real estate-related taxes to GDP is among OECD countries. It will be the second highest country.”
This contradicts the claim that the government used as a basis for inducing public opinion to raise the taxation tax, which was a’lower real estate ownership tax compared to developed countries’. President Moon said, “It is a general phenomenon around the world that the government actively intervenes while strengthening the tax system,” at a meeting of chief and advisors held at the Blue House in August last year. “The burden of holding tax was increased with this measure, but it is still low compared to other advanced countries.” Said.
Even last year, when it was difficult to secure tax revenue due to the bad economy, the final tax was lifted more than expected. According to the results of the fiscal year 2020 total tax revenue and total expenditure deadline, which was released by the Ministry of Strategy and Finance on the 9th, last year’s final tax revenue increased by 9293 billion won (34.8%) from the previous year (2,671.3 billion won) to 3.66 trillion won. It is 8.4% (279.6 billion won) higher than the estimated amount of 3,321 billion won at the time of budget planning.
The Ministry of Information and Infrastructure mentioned that the reason for the increase in tax revenue ▲ increased the fair market price ratio from 85% to 90% ▲ the official real estate price increased. The final tax is a tax imposed when the total publicly announced value of a house owned by an individual exceeds 600 million won. In the case of a single-family homeowner, the amount charged is 900 million won. From this year onwards, the tax rate for multi-homeowners will increase from 0.6 to 3.2% to 1.2 to 6% by section, and it is observed that only real estate tax will enjoy a boom while corporate taxes and tariffs suffer poor harvest.
Although the real estate tax was collected at the level of advanced countries, the government’s goal of easing asset inequality and stabilizing house prices was not achieved. Looking at the figure of asset inequality in Korea analyzed by Yu’s today, the net asset Gini coefficient excluding liabilities from total assets increased annually from 0.584 in 2017, deteriorating to 0.602 in 2020.
The Gini coefficient of total assets, including liabilities, also gradually became more polarized from 0.531 in 2017 to 0.544 in 2020. The real estate asset Gini coefficient, which shows the inequality of real estate assets, deteriorated from 0.491 in 2017 to 0.513 in 2020. After strengthening the taxation tax, asset inequality has worsened.
In the Comprehensive Real Estate Tax Act, the purpose of the final tax is to ▲enhance the equity of the tax burden ▲to stabilize real estate prices ▲to contribute to the balanced development of local finances and the sound development of the national economy. However, there are criticisms that the current real estate tax in Korea has not achieved this purpose, and that the tax philosophy itself is wrong. Experts are making observations that the real estate tax of the current structure cannot improve inequality such as redistribution.
Myung-jae Sung, a professor of economics at Hongik University, said, “Real estate-related taxes should be paid to local governments in exchange for the benefits of owning real estate, but approaching from the perspective of redistribution is that the philosophy on tax itself is wrong.” It does not cause environmental pollution just by having one, but the punitive method of taxing is causing an excessive tax burden on the people,” he said.
Rep. Yoo said, “Improving the equity of the tax burden is a story that the income redistribution function is performed through the comprehensive real estate tax.” “Income and real estate holdings are not proportional, and income inequality and asset inequality are different criteria. He pointed out that it is stupid to resolve polarization.”