Oh Se-hoon Proposes "Comprehensive Real Estate Tax to Be Converted to Local Tax... 100% Joint Taxation"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyemin] Seoul Mayor Oh Se-hoon proposed to the government to convert the comprehensive real estate holding tax (종합부동산세, 종부세) into a local tax and to implement 100% joint taxation. He also requested the government to swiftly crack down on real estate transactions suspected of speculation within Seoul.

Mayor Oh attended the Cabinet meeting on the morning of the 20th and stated, "Even in Seoul alone, about 60% of the total 종부세 is collected, but only about 10% of the 종부세 redistributed to Seoul is in the form of real estate allocation tax, creating an imbalance," according to the city.

He explained the reason for his proposal, saying, "With the sharp rise in official property prices, I understand that various discussions are underway in the National Assembly regarding property tax relief for single-homeowners, raising the criteria for special property tax taxation, lowering property tax rates, and adjusting tax brackets. If the property tax burden is eased due to the surge in official prices, revenue compensation for local governments due to the decrease in property tax should be made. Separately, true decentralization of power requires fiscal decentralization to precede."

Mayor Oh said, "The central government redistributes funds to comprehensively consider local fiscal conditions, social welfare, and regional circumstances, but the local government heads know their regions best," and requested, "If the 종부세 is to be redistributed as real estate allocation tax anyway, please actively consider converting the 종부세 into a local tax and implementing 100% joint taxation to reduce fiscal disparities between regions and realize true decentralization."

Along with this, Mayor Oh requested the Ministry of Land, Infrastructure and Transport and other central ministries to thoroughly investigate transactions suspected of real estate speculation. He said, "There are serious concerns as abnormal transactions and record-high prices have been reported in some apartments, such as those in Apgujeong-dong, causing disturbances in the real estate market," and urged, "The Ministry of Land should change the current quarterly verification system to a real-time verification system and swiftly and strongly crack down on cases where actual transaction prices surge due to abnormal transactions." He added, "If implementation is difficult, I hope some of the Ministry of Land's authority will be delegated to city and provincial governors."

Mayor Oh said, "The city is considering designating land transaction permission zones to address the unstable real estate market," and added, "Along with necessary measures to stabilize housing prices, we plan to regulate the speed of housing supply."

He also requested the National Assembly to proactively review the proposal to raise the real estate tax assessment criteria for single-homeowners currently pending. Furthermore, he said, "The official prices of apartment complexes will be finalized on the 29th, but the government has yet to present improvement measures," and demanded, "Please promptly clarify the government's position on ways for local governments to have authority and participate in the process of determining official apartment complex prices."

After the Cabinet meeting, Mayor Oh held a briefing at City Hall and conveyed the atmosphere, saying, "I will not introduce every discussion point from the meeting, but there were negative discussions regarding my proposals, and I made brief rebuttals to those."