[Yeouido Interview] Hong Ik-pyo "Punitive Level of Comprehensive Real Estate Tax Should Be Eased"

Democratic Party Rep. Hong Ik-pyo Announces Candidacy for Challenging Seocho-gap District
Responsible Politics Learned from Failure
"Using Comprehensive Real Estate Tax as a Housing Price Stabilization Measure During Moon Jae-in Administration Obscured the Core Issue"

Hong Ik-pyo, Member of the Democratic Party of Korea./Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Naju-seok] "I'm not running away."

On the 30th of last month, Hong Ik-pyo, a member of the Democratic Party of Korea (DPK), whom I met at the Culture, Sports and Tourism Committee chairman's office in the National Assembly, explained the background of moving his constituency to Seocho-eul in Seoul, right in the middle of the so-called 'tough terrain' of the three Gangnam districts. Hong, who served three consecutive terms in Jung and Seongdong-gap districts of Seoul, was elected as the regional chairman of Seocho-eul through a regional chairman recruitment in June this year. He abandoned a relatively well-established stronghold and stepped into a tough area where the DPK has not won since 1988. Having served as the DPK's Policy Committee Chair, Senior Deputy Chair, Director of the Democratic Research Institute, and chief spokesperson during the 19th presidential election, Hong, known as a policy expert and a representative face of the DPK, spoke of a 'new challenge' based on reflections on the light and shadow of the past five years under the Moon Jae-in administration.

Below is a Q&A.

How is the public sentiment in Seocho-eul, where you recently moved?

Until now, it has been a stronghold of the People Power Party or conservatives, but I sense subtle changes. Various behaviors shown by the Yoon Suk-yeol administration do not seem to meet the expectations of local residents. However, it is not that the public sentiment that withdrew support from the previous Moon Jae-in government or the DPK has returned. They have not withdrawn support for the current government, but there is underlying disappointment and bewilderment. It is our party's role to bring this flow of change to the surface.

Hong Ik-pyo, Member of the Democratic Party of Korea./Photo by Yoon Dong-joo doso7@

Hong Ik-pyo, Democratic Party of Korea lawmaker. / Photo by Yoon Dong-joo doso7@

You attracted attention by deciding to move to a relatively disadvantaged area. Why did you make this decision?

We lost in the presidential election and then in the local elections. I thought I should take responsibility. I could have considered not running, which is an easy choice. So I thought it better to go to a more difficult area, convey our party's values, and achieve meaningful results. Secondly, I thought change was necessary. To change something, you have to give up what you have. Thirdly, it's a challenge. The new future, the coming future, is something no one can predict.

Seocho-eul has many high-priced homes, so there seems to be strong resistance to the comprehensive real estate tax.

Residents are more concerned about the decline in housing prices than the comprehensive real estate tax. I don't think focusing on the comprehensive real estate tax issue is productive. The tax base has expanded excessively beyond the original design, and tax revenue has increased too much. There is a need to adjust this. Raising the threshold for the comprehensive real estate tax or easing punitive levels is necessary. However, we should not only look at the comprehensive real estate tax but also make equitable adjustments to the overall taxation system on real estate or assets. Property tax should be more realistic, and capital gains tax and transaction taxes should be lowered. In this process, tax justice, which means taxing the wealthy more, and tax stability must be maintained. A 30% increase in taxes compared to last year is problematic. It should be adjusted to around 10%.

What was the problem with the comprehensive real estate tax?

Originally, the comprehensive real estate tax was introduced as a form of wealth tax. More advanced countries have introduced wealth taxes. The idea is that the wealthy pay more taxes to help those in need. During the Moon Jae-in administration, it was used as a measure to stabilize housing prices, which blurred its essence. It was a wrong approach. It is necessary to clarify the purpose of collecting this tax and persuade the public. If the comprehensive real estate tax is to be maintained in the future, it should be operated according to its original intent. Like noblesse oblige, fundamental considerations are needed to ensure a sustainable society for social integration and harmony. Real estate policy consists of housing supply policy and housing welfare policy. Now, housing supply policy should be left to the market, and the government should focus on housing welfare.

You lost Seoul in the last presidential election. Was it because of the comprehensive real estate tax?

We should not conclude that we lost the last presidential and local elections solely because of real estate issues. Although there were real estate problems, there were also issues with people in the cabinet and the failure to meet the public's expectations after the Candlelight Revolution. There was an expectation for leadership that could overcome division and conflict, but neither proper clearing of deep-rooted evils nor leadership for integration was shown. These factors intertwined and manifested through real estate issues.

You were a leading policy expert within the DPK. What was the problem, and what needs to change?

It is not only a problem of the Moon Jae-in administration; any party generally lacked policy planning capabilities. A five-year administration is like a middle-distance race, neither a sprint nor a marathon. There should be a race strategy for each stage, such as the first year, second year, etc. If something is not working at a certain point, it should be abandoned. Also, there must be details. Everyone talks about policy, but if the specifics are not properly examined, the effectiveness of the policy decreases. During the Moon administration, support for policy direction was high, but the execution was low. It was a problem of details. We also need the ability to overcome bureaucratic dependence. Bureaucrats are a necessary evil for democratic countries. No matter how bad the leader is, the country operates because of bureaucrats. However, bureaucracy stifles innovation and change. We need the ability and will to debate with bureaucrats and surpass them. Policy flexibility is also necessary. If you insist only on policy direction and principles, you cannot produce results.

You have pointed out the issue of relocating the presidential office in the Culture, Sports and Tourism Committee. What do you see as the major problem?

In the U.S., it took eight years just to build the White House. George Washington, the first U.S. president, planned to live in the White House but never did. President Yoon Suk-yeol should have thought, "Even if I can't live there, it's okay," and proceeded with the relocation project. It is also problematic that it was done without legal regulations. It sets a bad precedent. At this rate, if the next president wants to move the office somewhere other than Yongsan, they can do so. Because without legal grounds, the presidential office can be moved as part of executive power. There should have been a revision of related regulations. Also, there should have been a verification process for the existing Blue House as a cultural asset. I proposed closing it during the winter season to preserve it after gaining the benefits of opening it immediately after President Yoon's inauguration, but it was not accepted.

President Yoon talks about freedom, but there are criticisms that freedom of expression is rather being suppressed.

I believe freedom and the rule of law are closely connected. If arbitrary rule by the president is reduced and the president, prosecution, and National Intelligence Service are regulated by law, citizens are protected accordingly. Citizens become freer within that framework. However, the current Yoon administration emphasizes responsibility for freedom. Emphasizing responsibility for freedom can lead to authoritarianism.