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The government’s policy for realizing the official price is considered to be a major factor that incurred excessive tax burden on taxpayers, along with the increase in the comprehensive real estate tax rate and the rapid rise in housing prices due to the failure of the real estate policy. Even this year, when the market price of housing prices has risen significantly, the government has carried out the realization of the published prices. It is pointed out that it was the case of pouring oil into the fire. The actualization rate (price reflection rate) of apartment houses with a public price of 900 million to 1.5 billion won has been raised from 69.2% last year to 72.2% this year. Over 1.5 billion won increased from 75.3% to 78.3%. This is why the public price of Seoul, where apartments are more than 900 million won, jumped 19.9%.
The reason why the government is implementing a policy for realizing the published price is because it believes that the published price, which is lower than the market price, is’abnormal’. It is “justifiable” to raise it close to 100% of the market price. The words made by former Minister of Land, Infrastructure and Transport Kim Hyun-mi in October last year show this idea in a condensed manner. At that time, former Minister Kim stipulated that the publicly priced price was below the market price as “neglecting the basics of the basics.” The process of matching the published price to the market price was defined as “the process of normalizing”. The Ministry of Land, Infrastructure and Transport announced that raising the realization rate to 100% through the’Real Estate Listed Price Realization Plan’ announced in January this year “conforms to the purpose of a reasonable price under the law.” The government plans to raise the realization rate of the public housing price to 90% by 2030.
At first glance, it seems fair to say that the quoted price is set close to the market price in order to properly reflect the value of the asset in the tax. However, experts point out that this is a’false compulsion’ due to misunderstanding of the nature of the quoted price.
Hong Ki-yong, a professor of business administration at Incheon University (former president of the Korea Taxation Association) said, “The official price is just a tool to calculate the appropriate tax burden just like the tax rate. It is, there is no reason why the quoted price should be the same as the market price.”
For example, a social consensus has been reached that a tenure tax of 5 million won is appropriate for a house worth 1 billion won. Let’s assume that the current tax rate is 10% and the fair market price ratio is 50%. At this time, even if the quoted price is only 10% of the market price, the holding tax is 5 million won. Even at this time, if you insist on’public price = 100% market price’, the property tax will be 50 million won.
This point is more evident when looking at examples of developed countries. The U.S. autonomously operates the property tax rate and the tax base realization rate (Korea’s published price realization rate) for each local government. In New York, the nominal property tax rate is as high as 19.99%, but the target realization rate is only 6%. In Washington, on the other hand, the realization rate is 100%, but the nominal tax rate is as low as 0.85%. If the tax rate is high in New York, like in Korea, “I will properly reflect the asset value in the quoted price” and raise the realization rate to 100%. If so, Korea should not raise the official price realization rate mechanically, but rather consider the tax rate and market price comprehensively to determine whether the current holding tax burden is appropriate.
Many homeowners are complaining that “the recent property tax has risen so much that it is burdensome.” A lawsuit has been filed for unconstitutional taxation. Lee Seok-yeon, former head of the lawsuit, who is leading the unconstitutional lawsuit, said, “There is a punitive level of increase that far exceeds the power of the people.” Is big,” he pointed out.
Park Hoon, a professor at the Department of Taxation at the University of Seoul, said, “Currently, the ownership tax is at a level that exceeds the gains from the transfer of not only multi-homed people but also one-homed person, so the taxpayer is forced to lose property.” Professor Park is a scholar who has always advocated the theory of strengthening the ownership tax.
From this year to 2023, the government decided to cut the property tax rate on houses with the official price of 600 million won or less. It is pointed out that this is “the government has self-admitted that the current ownership tax burden is high.” On the one hand, however, the government has decided to apply the policy to realize the official price for houses with the official price of less than 900 million won from this year. It is’the price of giving a bottle and giving a medicine’.
There are also concerns about such policies within the government. An official from the Ministry of Economy said, “It is a clear contradiction to raise the published price while lowering the tax rate.” He pointed out, “This problem occurred when I approached it.”
Rather, there is a reasonable reason to refrain from excessively raising the quoted price. In addition to the holding tax, the published price is widely used as a standard for welfare benefits such as various contributions such as health insurance premiums and basic pensions. Each system has an appropriate level of burden and an appropriate standard for supply and demand, but raising one public price is likely to affect all other systems and lead to unreasonable results. A typical example is the health insurance fee, which is becoming more dissatisfied by local subscribers. President Joo Myung-ryong of the Korean Retirees Association said, “There are many people that the government has increased the publicly announced price so that the burden of maintenance tax as well as construction fee has become difficult to bear.” He appealed, “Retirees often have a home but little income, so the burden is greater.”
There is a problem even if the government decides that the proper holding tax has not been imposed and raises the official price. Whether the current tax is at an appropriate level, and whether it should be raised or lowered, is an issue that requires a national consensus. This is the reason why Article 59 of the Constitution stipulates the tax legalism that “the category of tax and the tax rate shall be determined by law”. The tax rate means the people’s ability to bear the tax burden, and in order to increase the people’s tax burden, it means that a resolution of the National Assembly, which requires the people’s consensus, is required. However, even though the public price increase has the same effect as the tax increase, it does not require the consent of the National Assembly. It was a notice from the Minister of Land, Infrastructure and Transport.
Professor Hong Ki-yong emphasized, “Strengthening the burden of holding tax through an increase in public prices is highly likely to violate tax legalism.”
Reporter Seo Min-joon [email protected]