Statements Targeting Public Sentiment Including 1-Year Postponement of Heavy Capital Gains Tax on Multi-Homeowners
Democrats Face Increased Confusion... Uncertain if Government Cooperation Will Be Secured
[Asia Economy Reporter Jeon Jin-young] Lee Jae-myung, the presidential candidate of the Democratic Party of Korea, who is sensitive to public sentiment on real estate, is causing confusion within the party with his ‘tax backtracking’ remarks. It is uncertain whether cooperation from the party and the government can be secured. The candidate’s statements have also increased the likelihood of renewed conflicts between the party and the government.
When Lee recently mentioned a one-year suspension of the increased capital gains tax on multi-homeowners and a differentiated reduction of capital gains tax depending on the timing of property disposal, various opinions erupted within the Democratic Party on the 13th, ranging from ‘immediate discussion initiation’ to ‘only causing market confusion.’ Representative Jin Sung-jun said in a radio interview, "I do not agree with the easing of capital gains tax. If you sell a house and gain unearned income, paying the corresponding tax is consistent with tax justice." A first-term Democratic Party lawmaker also said, "This has been a voice steadily raised among some lawmakers after the party suffered difficulties due to real estate issues," but added, "However, it does not align with the party’s identity and could rather cause market confusion, so there are many opposing voices. This cannot be easily ignored."
On the other hand, the election campaign committee declared immediate discussion initiation based on the candidate’s remarks. Yoon Hu-deok, head of the policy headquarters of the campaign committee, told reporters after a National Assembly press conference that morning, "Since the candidate gave an opinion on suspension, we will immediately start discussions with the party’s policy committee from today." When asked if they would also consider targeted adjustments to the comprehensive real estate holding tax, he replied, "It is about resolving discomfort caused unintentionally by the increased tax rate on multi-homeowners in the comprehensive real estate tax." He added, "Hasn’t the media pointed out many cases where people classified as multi-homeowners under the comprehensive real estate tax suffer inconvenience despite not having speculative purposes?"
Meanwhile, Representative Kim Jin-pyo, who served as chairman of the Special Committee on Real Estate, said in a phone interview that day, "It seems the candidate judged this as a wise way to bring properties to the market. The party needs to review this and discuss it in the tax subcommittee of the Strategy and Finance Committee." Regarding concerns about opposition from the Ministry of Strategy and Finance, Kim pressured the authorities by saying, "It seems they interpret this as an unconditional easing of capital gains tax, but is there any alternative in the current situation?" implying that he intends to push this proposal through.
The Ministry of Strategy and Finance expressed embarrassment over the presidential candidate’s stance on easing capital gains tax and has so far voiced opposition. Hong Nam-ki, Deputy Prime Minister and Minister of Strategy and Finance, clearly stated on the 2nd, when the temporary easing plan for multi-homeowners’ capital gains tax was first mentioned, that "it could cause instability in the real estate market and undermine policy credibility." Park Wan-joo, chairman of the Democratic Party’s Policy Committee, also stepped back during a press briefing on the 7th, saying, "Considering easing for multi-homeowners is very burdensome," and "There may be parts to supplement in the next government, but it is not something to be immediately reviewed," reflecting awareness of the party’s internal opinion that ‘market confusion is inevitable.’ The Ministry of Strategy and Finance also clarified in a press release that "there has been no discussion within the government about easing capital gains tax for multi-homeowners, and there are no plans to promote such measures."
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