[단독] The bitter acquisition tax boom brought about by Panic Buying

As housing prices soared to the sky last year, the number of related tax revenues also surged as housing transactions for young people in their 20s and 40s surged in panic buying (panic buying). The amount of acquisition tax collected by local governments across the country increased significantly from the previous year, approaching 30 trillion won.

On the 28th, through the Office of the People’s Strength, Maeil Economics Bureau, Choo Gyeong-ho, a collection of the status of local taxes imposed and collected in 2020 by 17 metropolitan local governments across the country, the total acquisition tax collected from 23 trillion won in 2019 to 29.5 trillion won last year for one year. Increased by 23.7%. It is the highest increase in the past six years, and the amount collected is the highest ever.

By provincial and provincial, 16 provincial and regional governments in 17 provinces nationwide, excluding Ulsan, saw higher acquisition taxes than a year ago. In particular, the increase rate of acquisition tax in 14 provinces including Busan (52%), Seoul (33.6%), Daegu (30.7%), Daejeon (29.2%), Jeonnam (28.5%), Gyeonggi (22.9%), and Chungnam (21.8%) By recording double digits, tax revenues increased significantly across the country. Acquisition tax imposed on the acquisition of assets is a special and metropolitan tax, which is a tax paid when real estate, vehicles, machinery, and aircraft are acquired. As a single tax item, it occupies the largest portion of local taxes and is, in effect, a’feed line’ of local governments. Since 2016, it has stayed in the range of 21 trillion to 23 trillion won per year, but it has increased unusually last year.

Unlike other specs, acquisition tax is sensitive to economic conditions. Despite the negative economic growth rate due to the Corona 19 crisis last year, the reason why the acquisition tax was booming is because of the active housing transactions. Most of the acquisition tax is real estate acquisition tax paid when buying and selling real estate. An official from the Ministry of Public Administration and Security explained, “The tax revenue varies greatly from year to year depending on the size and number of transactions.” Congressman Chu said, “There is an increase in housing transactions, but a sharp rise in prices is one of the factors that increase acquisition tax,” he said. “There is a great concern that the increased tax burden will be passed on to common people’s housing expenses such as soaring jeon and monthly rent prices.”

[단독] Acquisition tax’all-time high’ is blamed on the 文 real estate policy

5.6 trillion won in acquisition tax last year

With a regulatory policy that reduces housing supply
Transactions surge in panic buying among young people
Soaring house prices also boost acquisition tax
In Busan, the collection amount increased by 52% in one year

The Moon Jae-in administration’s failure in real estate policy is the background of the sharp increase in acquisition tax revenues, despite the decline in national tax revenues due to the negative economic growth of Korea last year. As a result of the government’s strict real estate policy reduction in supply under conditions that are favorable for asset prices to rise due to low interest rates and liquidity,’panic buying (buying a house in fear)’ spread and housing transactions surged.

According to data submitted by the Ministry of Public Administration and Security and local governments across the country on the 28th, lawmaker Chu Gyeong-ho showed that local taxes were removed more than a year ago in 17 metropolitan cities last year. This is contrary to the fact that national tax revenues declined for the first time in history for the first time in history due to the aftermath of the Corona 19 incident. One of the major local tax items, the acquisition tax, was driving the boom in local tax revenue. In the acquisition tax, the proportion of real estate acquisition tax such as housing is very high.

Gyeonggi-do’s acquisition tax collection amounted to 9 trillion won, which was the largest in history last year, of 1.4 trillion won, which was 22.9% higher than 7.30 trillion won a year ago. Real estate transactions such as houses, buildings and land directly affected the increase in Gyeonggi acquisition tax. According to the Korea Appraisal Board, real estate transactions in Gyeonggi-do were 37,1113 cases last year, up 80.3% (16,5298 cases) from the same period last year (205,815 cases).

Sejong and Daejeon, which ranked 1st or 2nd in the nationwide house price increase rate during the same period, also saw a significant increase in acquisition tax income as housing transactions became active. According to Sejong City, the number of apartment housing transactions last year was 12,820, which is more than double (128%) from 5599 cases last year. As housing transactions increased, acquisition tax revenues naturally surged. Sejong City’s acquisition tax revenue last year was 2874 billion won, a 14.2% increase from a year ago (251.7 billion won). In Daejeon, where housing prices surged, acquisition tax income also increased. The acquisition tax in Daejeon last year was 5667 billion won, a 29.2% increase from the previous year. During the same period, the number of housing transactions was 186651, an increase of 2,000 from the previous year.

It is interpreted that the real economy is enjoying a non-temporal boom due to the boom in asset markets such as real estate and stock markets in a slump. In particular, experts cite the rise in house prices due to the government’s failure in real estate policy as the reason for the explosive increase in acquisition tax.

Professor Park Hoon of the Department of Taxation at the University of Seoul said, “Last year, the booming acquisition tax recorded the largest increase in history is the result of a combination of increased transaction volume and higher real estate prices.” Proof of not being able to do it,” he explained.

Seong Tae-yoon, professor of economics at Yonsei University, said, “Contrary to the government’s intention, as house prices continued to rise nationwide last year, real demand to collect loans as much as possible among young generations in their 30s and 40s exploded. The increase was a result of the’fear’ sentiment of having to hurry to prepare my own house while bearing a considerable level of acquisition tax burden,” he said.

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