Chairman Kim Jin-pyo: "The intention is to simplify and make it fair according to the original purpose and spirit of the system"
Opposition within the party... Not aligned with Democratic Party values and ideology
Kang Byung-won: "Many lawmakers oppose comprehensive real estate tax and capital gains tax... Unearned income should be reclaimed"
[Asia Economy Reporter Oh Ju-yeon] The Democratic Party of Korea has placed emphasis on protecting the angered public sentiment by drastically revising real estate policies, which were cited as the cause of their crushing defeat in the April 7 by-elections. However, while only the property tax reduction was confirmed as the party's official stance, the unresolved capital gains tax and comprehensive real estate tax remain divided between the 'Special Committee proposal vs. government proposal,' openly revealing the differences between the party and the government. Although the Democratic Party has pledged to reach a conclusion by June, internal opposition argues that these proposals do not align with the party’s values and ideology representing the livelihood and common people. Moreover, the government, with just about a year left in its term, feels burdened by the prospect of revising real estate policies again, making further discord inevitable for the time being.
On the 28th, Kim Jin-pyo, chairman of the Democratic Party’s Real Estate Policy Special Committee, appeared on CBS Radio’s 'Kim Hyun-jung’s News Show' and said, "Looking at how public sentiment on real estate worsened in the April 7 by-elections, repeatedly patching up the tax system has become a trap, making it complex and difficult over time." He emphasized, "If there is an opportunity to fundamentally revise it, we should simplify and fairly amend it according to the original purpose and intent of the system." This was a remark aimed at those opposing changes, urging not to undermine the original intent.
The day before, the Democratic Party’s Real Estate Special Committee announced a 'Supply, Finance, and Tax Improvement Plan for Housing Market Stabilization' immediately after a policy party meeting, confirming as party policy a property tax relief plan that reduces the property tax rate by 0.05 percentage points for houses with official land prices between 600 million and 900 million KRW. Capital gains tax and comprehensive real estate tax decisions will be made after party-government consultations in June.
The property tax relief plan was adopted as party policy without much disagreement, as consensus had been formed over time. However, there were significant differences of opinion regarding the comprehensive real estate tax and capital gains tax. The Special Committee’s proposal is to raise the capital gains tax exemption threshold for single-homeowners from 900 million KRW to 1.2 billion KRW and to impose the comprehensive real estate tax on the top 2% of official land price holders. However, it is reported that opinions were split 5:5 in the party meeting on whether to touch the comprehensive real estate tax and capital gains tax.
Chairman Kim also appeared on another radio show that day, pointing out that tax friction could ultimately influence presidential election votes and urged a decision in line with the Special Committee’s proposal. He particularly emphasized that the controversial comprehensive real estate tax does not deviate from its original purpose.
On MBC Radio’s 'Choi Kyung-young’s Strong Current Affairs,' Kim said, "When it was introduced in 2009, the purpose was to target the top 1% of nationwide real estate owners with excessive holdings, so now we propose to introduce it for about 2%, which is double that at the time." He added, "We plan to create regulations that allocate half of the increased tax revenue to youth housing welfare and welfare for low-income residents, giving pride to comprehensive real estate tax payers and increasing acceptance among the general public."
However, opposition remains strong. On BBS Radio’s 'Park Kyung-soo’s Morning Journal,' lawmaker Kang Byung-won said, "There were quite a few lawmakers opposing the comprehensive real estate tax and capital gains tax," reiterating the party’s ideology by stating, "The Democratic Party consistently holds the position that unearned income must be thoroughly reclaimed."
A member of the Democratic Party’s Real Estate Special Committee said in a phone interview, "It is difficult to decide on one side as opinions are evenly split, but not making a decision quickly can be seen as neglect by the government and ruling party." Regarding the simultaneous disclosure of both the government and Special Committee proposals, the member said, "It is meant to convey that the situation is difficult in many ways."
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