Seoul City Launches Tax Reform Advisory Group... Proposes Property Tax Reform Plan to New Government

[Asia Economy Reporter Kim Min-young] The Seoul Metropolitan Government has launched a tax reform advisory group and is preparing a tax reform plan for housing holding tax.

On the 25th, Seoul announced that it has launched a tax reform advisory group consisting of 10 external experts from various fields such as academia, taxation, and tax administration, and plans to prepare a housing holding tax reform plan that citizens can feel. Holding tax refers to taxes paid by those who own land or houses, collectively referring to the local tax 'property tax' and the national tax 'comprehensive real estate holding tax.'

The city explained the background of launching the advisory group by pointing out, "Housing is an essential good for daily life, and securing residential safety is important, but the tax burden is increasing even for single-homeowners who actually reside in their homes, and especially the increase in tax burden on retired elderly people without tax-paying ability is a serious problem."

The tax reform advisory group will hold advisory meetings frequently starting with its first meeting on the day to complete a reform plan for the holding tax system reform. The city plans to propose the tax reform plan to the Presidential Transition Committee in April or May, coinciding with the launch of the new government.

The city pointed out that although the government has implemented several tax strengthening policies to suppress real estate speculative demand, Seoul housing prices have instead more than doubled.

According to the Citizens' Coalition for Economic Justice, the average apartment sale price in Seoul rose from 620 million won in 2017 to 1.29 billion won in 2021, more than doubling. The property tax on housing borne by Seoul citizens increased from 897.3 billion won in 2017 to 1.7266 trillion won in 2021. The comprehensive real estate holding tax burden on housing increased about 12 times from 236.6 billion won in 2017 to 2.7766 trillion won in 2021.

The city aims to alleviate the housing holding tax burden that citizens can feel through the tax reform advisory group by discussing tax reform and system improvement measures for the current property tax and comprehensive real estate holding tax.

First, reflecting the reality of rapidly rising housing prices, the property tax rate system for housing, which has not changed since 2009, will be completely overhauled, and the upper limit ratio of tax burden will be reasonably adjusted. The city also plans to consider introducing a tax credit system to actively protect single-homeowners who actually reside in their homes and retired elderly people.

Regarding the comprehensive real estate holding tax, in the short term, the city is considering easing the tax burden on single-homeowners, and in the long term, reviewing the plan to convert the national comprehensive real estate holding tax into a local tax. In addition, the city plans to discover unfair cases of comprehensive real estate holding tax burden and propose system improvements.

Lee Byung-han, Director of the Seoul Metropolitan Government’s Finance Bureau, said, “Tax reform for holding tax is absolutely necessary to alleviate excessive tax burdens on citizens,” and added, “We will prepare reasonable policy alternatives through the newly launched ‘Tax Reform Advisory Group.’”