The Korean Association of Public Finance to Hold the '2022 Spring Regular Academic Conference' on the 25th
[Asia Economy Sejong=Reporter Son Sun-hee] There has been a call to abolish the 'heavy taxation on multiple homeowners,' a core element of the Moon Jae-in administration's real estate taxation system. Additionally, it has been suggested that the comprehensive real estate tax should be integrated and restructured with the property tax.
According to the Korean Association of Public Finance on the 23rd, Ahn Jong-seok, director of Gaon Tax Policy Research Institute, will present "The Direction of Tax Policy for the New Government," which includes these points, at the "2022 Korean Association of Public Finance Spring Regular Academic Conference" held at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, on the 25th.
In his discussion materials, Director Ahn stated regarding the current taxation system, "Excessive tax burdens are imposed on multiple homeowners with the aim of inducing the sale of houses by multiple homeowners," and added, "Holding multiple homes is unconditionally regarded as 'speculation,' which burdens rental income earners and the rental market." He also pointed out that "(real estate-related) tax systems are excessively complicated," and "the result seen in the market is that rental prices have surged without any effect on stabilizing housing prices."
Accordingly, Director Ahn argued that the heavy taxation on multiple homeowners is a "discrimination based on the number of houses" and called for its abolition, proposing that the special deduction system for long-term ownership should be restructured into a low-rate taxation method on normal income.
He particularly emphasized the need to integrate the comprehensive real estate tax and property tax, stating, "There is a possibility of a decrease in tax revenue as a result, so countermeasures are necessary." In the mid to long term, regarding rental income tax, he urged expanding the tax base by "improving the system so that landlords can be taxed without exception."
Regarding the rapid increase in national debt threatening fiscal soundness, he said, "Responding through expenditure restructuring should be prioritized," and added, "Rather than active tax increases such as raising tax rates, the focus should be on expanding the tax base through reducing exemptions and deductions, normalizing the tax system, and strengthening tax administration."
However, he also noted that in the long term, active tax increase measures such as "raising tax rates" will be necessary, but these should be carried out simultaneously as a package with "structural reforms of the National Pension and Health Insurance." Director Ahn stated, "If tax systems, the National Pension, and Health Insurance are approached separately and individually, it is expected to be difficult to prepare a rational reform plan."
Meanwhile, at this academic conference, Professor Park Myung-ho of Hongik University gave a presentation titled "Evaluation and Tasks of Fiscal Sustainability through Long-term Fiscal Outlook." Professor Park pointed out, "Korea's general government debt ratio (as of 2020) is 48.9%, which is better than the OECD average (78.2%), but considering the average of non-reserve currency countries (53.6%) and the rate of increase, it is not a stage to be complacent."
He further urged the new government to "establish a foundation for sustainable national finances while taking care of the welfare of the current generation without burdening future generations," calling for the introduction of "fiscal rules."
Regarding the "four major public pensions," Professor Park emphasized, "They are all structured unsustainably, only differing in timing," and stressed, "Reforms should be pursued that involve 'paying more and receiving less' without considering political advantages or disadvantages."
As a measure to increase tax revenue for this, he proposed, "Among the three major period taxes, the most growth-friendly value-added tax rate should be gradually raised to 15%."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
