Hong Nam-ki: "No Capital Gains Tax Relief for Multi-Homeowners"... Clash with Ruling Party

Earlier, Park Wan-joo, Democratic Party Policy Committee Chair, Opposed "Consideration of Relaxation"
"Mentioned Damage to Policy Credibility and Sense of Deprivation Among the Homeless"

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 Reporter Kim Hyunjung] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, emphasized that there are no plans to ease capital gains tax for multi-homeowners, clashing with the ruling party that sought to win public favor through tax adjustments ahead of the presidential election.

In his opening remarks at the Emergency Economic Central Countermeasure Headquarters meeting held at the Seoul Government Complex on the morning of the 2nd, Deputy Prime Minister Hong stated, "There has been no discussion within the government about easing capital gains tax for multi-homeowners, and I clearly say there are no plans to pursue such measures." This was a direct rebuttal to Park Wan-joo, the Policy Committee Chair of the Democratic Party of Korea, who on the 30th of last month said that the party was considering lowering capital gains tax for multi-homeowners. Park was reportedly referring to the need to open an exit by temporarily lowering capital gains tax amid the significantly increased burden of comprehensive real estate tax and other holding taxes.

Deputy Prime Minister Hong stressed, "Given the recent continued stabilization of the housing market and the increase in listings, 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 trust due to repeated exemptions from heavy taxation and feelings of deprivation among those without homes or with only one home." The Ministry of Economy and Finance had distributed materials with the same message the day before, strongly indicating their unwillingness to ease the tax, and the head of the ministry clearly expressed opposition.

The tax strengthening for multi-homeowners was announced in July last year and has been implemented since June 1 of this year for multi-homeowners in designated adjustment areas, meaning it has been in effect for less than six months. Two-homeowners are subject to the basic tax rate (6?45%) plus an additional 20 percentage points, and those with three or more homes are subject to the basic tax rate plus 30 percentage points, resulting in a maximum capital gains tax rate of 75%.

Earlier, the National Assembly's Planning and Finance Committee passed a bipartisan amendment to postpone the taxation of virtual assets by one year until after the presidential election and to raise the capital gains tax exemption threshold for single-homeowners from 900 million won to 1.2 billion won. Regarding the postponement of virtual asset taxation, there were evaluations that both ruling and opposition parties united to capture the votes of young people in their 20s and 30s, along with criticisms that it does not align with tax justice.