South Korea's Property Tax Burden 1.7 Times OECD Average... Corporate Tax Also Above Average

[Sejong=Asia Economy Reporter Son Seon-hee] It has been revealed that the burden rates of property tax and corporate tax in Korea are higher than the average of the Organization for Economic Cooperation and Development (OECD) member countries. In particular, the property tax burden rate reached 1.7 times the OECD average.

According to the analysis of general government fiscal statistics by the Korea Institute of Public Finance on the 12th, as of the 2019 fiscal year, Korea's property tax burden rate was 3.3%, exceeding the OECD average property tax burden rate of 1.9%. Property tax includes automobile tax, inheritance and gift tax, securities transaction tax, and comprehensive real estate tax. The corporate tax burden rate was also higher than the average (3.0%) at 3.8%.

Looking at each tax item, most items were lower than the OECD average, but only property tax and corporate tax were higher than the average. Korea's personal income tax burden rate was 5.4%, about two-thirds of the OECD average (8.3%). The value-added tax burden rate was also 4.6%, significantly below the OECD average of 7.0%. In other words, Korea can be interpreted as a country that imposes higher taxes on property but collects less tax on income.

The gap between property and income tax burden rates is estimated to have widened further. This is because the government recently increased tax revenue from property taxation items due to the realization of real estate prices and official prices.

Korea's overall tax burden rate was 20.1%, which is 4.8 percentage points lower than the average tax burden rate of 24.9% among the 37 OECD member countries. The tax burden rate is the ratio of government tax revenue to gross domestic product (GDP). This means that Korea generally collects less tax relative to its economic size compared to OECD member countries.

The national burden rate, which refers to the proportion of tax revenue and social insurance contributions combined in GDP, is also lower than the OECD average. Korea showed a level of 27.7% in 2019, lower than the OECD average of 33.8%.