Hong Nam-ki: "No Clear Plan to Ease Capital Gains Tax for Multi-Homeowners" (Comprehensive)

Through Opening Remarks at the 49th Economic Central Disaster and Safety Countermeasure Headquarters Meeting on the 2nd, Reiterated
With November Inflation Soaring to 3.7%, Mentioned "Introduction of Price Responsibility System for Relevant Ministries"

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is delivering opening remarks at the Central Emergency Economic Countermeasures Headquarters meeting held on the 2nd at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kim Hyun-min kimhyun81@

[Sejong=Asia Economy reporters Kim Hyunjung and Moon Chaeseok] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, emphasized on the 2nd that there has been "no discussion and no plan to proceed" regarding the easing of capital gains tax for multi-homeowners. Regarding the consumer price index soaring to the highest level in 9 years and 11 months (3.7% as of November), he said, "We will introduce a ministerial responsibility system for prices."

On the morning of the 2nd, during the 49th Economic Central Disaster and Safety Countermeasure Headquarters meeting held at the Seoul Government Complex, Deputy Prime Minister Hong mentioned reports about easing capital gains tax for multi-homeowners in his opening remarks, stressing, "I clearly state that there has been no discussion and no plan to proceed."

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is presiding over the Emergency Economic Central Disaster and Safety Countermeasures Headquarters meeting held at the Government Seoul Office in Jongno-gu, Seoul, on the 2nd. Photo by Kim Hyun-min kimhyun81@

◆"Easing capital gains tax, side effects are significant" expresses refusal= Deputy Prime Minister Hong pointed out, "In the current situation where the housing market stabilization trend continues and listings are increasing, temporarily lowering capital gains tax for multi-homeowners could cause renewed instability in the real estate market due to the withdrawal of existing listings expecting tax savings during the legislative process." He added, "There are also concerns about side effects such as damage to policy credibility due to repeated surcharges and exemptions, and feelings of deprivation among non-homeowners and single-homeowners."

He further stated, "We will place absolute stability of the real estate market, which is of great interest to all citizens, as the top policy priority and make every effort," and requested, "We ask all economic agents to join forces together." The Ministry of Economy and Finance also distributed materials with the same intent the day before, indicating a refusal to ease the tax.

Previously, in July last year, the government raised the capital gains tax surcharge rate by 10 percentage points for multi-homeowners in designated adjustment areas. At that time, the government set a nearly one-year grace period and fixed the implementation date and target as multi-homeowners in designated adjustment areas after June 1 of this year. Accordingly, two-homeowners are subject to a capital gains tax rate of up to 75%, which is the basic rate (6?45%) plus a 20 percentage point surcharge, and those with three or more homes are subject to the basic rate plus a 30 percentage point surcharge.

[Image source=Yonhap News]

◆With prices jumping 3.7%, "introducing ministerial responsibility system for prices" = The government decided to strengthen policy measures by introducing a ‘ministerial responsibility system’ where each government ministry is responsible for price management in their respective sectors. Deputy Prime Minister Hong emphasized, "We will concentrate our price response capabilities by next year’s first half through a periodic ministerial price monitoring system, the introduction of sector-specific price responsibility by ministries, and the operation of local government price situation task forces (TFs)."

The consumer price index increase announced that day for November was 3.7% year-on-year, the highest level in 9 years and 11 months since December 2011’s 4.2% rise. Deputy Prime Minister Hong cited the price increases in petroleum products, dining out, processed foods, and vegetables as the background for the price rise.

However, he emphasized that the year-end price increase rate would somewhat ease and that globally it is not at a worrisome level. He explained, "Amid the global price rise trend, our level is lower compared to major countries," and forecasted, "Next month, the rise will slow due to the calming of international oil price increases, the effect of fuel tax cuts, and the early end of kimchi-making season." He added, "We will mobilize all possible policy tools to ensure that living prices for ordinary citizens are managed as stably as possible."

Additionally, to enhance the effect of the fuel tax cut policy, the government plans to abolish the current 1 km distance restriction to encourage the expansion of budget gas stations. Deputy Prime Minister Hong said, "To quickly reflect the effect of the fuel tax cut, we will encourage price reductions at privately owned gas stations and abolish the current 1 km distance condition to expand budget gas stations in some urban areas." He added, "We will also expand discount coupons for agricultural, livestock, and fishery products, finalize the scale of expanded tariff quotas for raw materials with sharp price increases next month, and extend the special period for tax credit rates and limits on duty-free agricultural product deemed purchase tax deductions by two years."

◆Voice phishing causes 700 billion won annual damage... intensifying response= Deputy Prime Minister Hong also announced measures to protect the assets of ordinary citizens, including support for the development of technology and apps to block voice phishing.

He explained, "The annual damage from voice phishing exceeds 700 billion won, and overall, damage to ordinary citizens continues to occur from the so-called three major illegal activities: voice phishing, illegal private loans, and illegal multi-level marketing." He added, "The government plans to select 10 immediate response tasks and respond strongly."

He said, "Regarding voice phishing, we will promote the introduction of a new messaging service that makes verification easy, expand the scope of phone numbers subject to suspension, support the development of technology to pre-block suspicious calls and malicious apps, and strengthen the crime response system including the establishment of an integrated reporting system."

The scope of phone numbers subject to suspension will include numbers used for face-to-face extortion-type voice phishing and smishing text message sending numbers. He explained that the Ministry of Science and ICT and the National Police Agency will collaborate on developing voice phishing prevention technology (2.6 billion won in the 2022 government budget).

Deputy Prime Minister Hong said, "Regarding illegal private loans, we will strengthen support for vulnerable groups by activating joint lawsuits against the same illegal private loan operators and promote tougher punishment of illegal private loan operators through amendments to the Loan Business Act." He emphasized, "Regarding illegal multi-level marketing, we will significantly strengthen market monitoring, including activating the reward system for reporting."

On the same day, Deputy Prime Minister Hong also mentioned the service infrastructure advancement plan and youth support policies prepared through the 2nd Service Industry Innovation Task Force (TF). In particular, to improve productivity in the service industry, he announced that they will promote three major areas of advancement?research and development (R&D), standards and certification, and service statistics?along with a ‘3+1’ core task including ‘training core service personnel.’ He explained, "Next year, we will expand government investment in service R&D, activate R&D such as establishing a copyright infringement response system, support standards and certification systems including preparing a roadmap for developing standards for 100 core services, and strengthen training of core personnel in new service areas such as the metaverse."