On the night of December 16, 1773, about 100 American colonial residents dressed as Native Americans appeared at Boston Harbor in the United States. They held axes in their hands and had coal dust smeared on their faces. They boarded a trade ship owned by the East India Company, which was loaded with tea, threatened the captain and crew, and threw all the tea boxes piled in the cargo hold into the sea. At that time, Britain had enacted a tariff law prohibiting tea smuggling by American colonial merchants and granting the East India Company a trade monopoly. This incident was sparked by the enraged citizens of Boston.
The so-called Boston Tea Party sparked a consciousness among American intellectuals that they should have independent taxation rights from Britain, which eventually led to the American War of Independence in 1775. The Boston Tea Party legacy continues to this day as the conservative far-right group known as the "Tea Party" tax resistance movement. In early 2009, when the Barack Obama administration announced an $780 billion economic stimulus package, the Tea Party expanded into a citizen movement opposing the rapid increase in national debt.
The tax resistance movement recently appeared domestically as well. On the afternoon of the 13th, "Tax Resistance National Movement" briefly rose to number one on Naver's real-time search rankings. Netizens opposing the government's real estate policies repeatedly entered this phrase on the portal site, pushing it to the top of the trending searches. This was a coordinated response by netizens dissatisfied with the government's consecutive real estate tax-focused measures, the June 17 and July 10 policies. Other recent top real-time search terms included "Minister Kim Hyun-mi lies," "Constitution Article 13 Clause 2," "June 17 unconstitutional, tears of the common people," "Withdrawal of support for Moon Jae-in," "Retroactive unconstitutionality, corrupt government," and "Ministry of Land audit request."
As real estate prices surged despite the June 17 measures, the government and the Democratic Party announced supplementary measures on the 10th. They issued additional measures within less than a month, focusing on strengthening taxation. The government and ruling party identified multi-homeowners and short-term traders as the main causes of the real estate price surge and imposed heavy taxes on them.
For owners of three or more homes and two homes in regulated areas, the comprehensive real estate tax top rate was raised to 6.0%. The capital gains tax surcharge rate for multi-homeowners was increased by 30 percentage points from the previous rate, allowing up to 72%. For short-term sales held less than one year, a capital gains tax rate of up to 70% was included. Acquisition tax was also raised to 8% for two-homeowners and up to 12% for owners of three or more homes.
Criticism poured in that all taxes related to housing?from acquisition to holding and sales?were raised, effectively blocking any escape routes. There were also claims that "this is effectively a tax increase under the pretext of real estate." Terms like "rabbit chase regulation," "hammer tax increase," and "mole-catching tax increase" were also mentioned.
The government and ruling party countered that the measures targeted multi-homeowners and that single-homeowners would not be affected. However, a closer look at the government’s measures reveals that while taxes on multi-homeowners increased, the tax burden on single-homeowners naturally rose as well. For example, according to a case cited by the Ministry of Strategy and Finance, Mr. A, who owns a 3.1 billion won apartment in Seoul (assuming a 3-year holding period), would have to pay 10.48 million won in comprehensive real estate tax next year if the official price rises to 4 billion won, even though he did not have to pay it this year.
While some argue that "since house prices have risen, such a tax burden is natural," a 10 million won tax is almost a punishment for retirees with no income. With official land prices having risen sharply over the past two to three years, the middle class owning not only high-priced apartments but also mid- to low-priced apartments is expected to face increased tax burdens due to these measures.
The bigger problem is that if the real estate market does not stabilize despite the government's tax bomb, public dissatisfaction will explode. There is no guarantee that a Korean version of the Tea Party movement will not occur. The government and ruling party should heed experts’ warnings that housing prices cannot be controlled by taxation alone without supply measures.
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