[Q&A] Can the Comprehensive Real Estate Tax Really Be Abolished?

Some in the Democratic Party Call for Amendment or Abolition
People Power Party Focuses on Reform Over Abolition
Presidential Office Emphasizes 'Abolition' as a Long-Term Goal

Following the opening of the 22nd National Assembly, discussions about abolishing or reforming the Comprehensive Real Estate Tax Act have emerged as a major issue. The possibility of amending the comprehensive real estate tax, which has long been a source of intense ideological debate within political circles, was recently hinted at by the Democratic Party of Korea, the largest party in the Assembly, marking a significant shift. Notably, differences of opinion are evident not only between the ruling and opposition parties, but also between the Presidential Office and the ruling party, as well as within the Democratic Party itself. The key question is whether a consensus-such as abolition or reform-can be reached on the comprehensive real estate tax during this year’s regular National Assembly tax law discussions.

How Did the Debate on Reforming the Comprehensive Real Estate Tax Begin?

Park Chan-dae, who was elected as the Democratic Party’s new floor leader, expressed in a media interview immediately after taking office that owner-occupied single-home households should be excluded from the tax base. Although this was initially described as Park’s personal opinion, the issue gained traction when Ko Min-jung, a top member of the Democratic Party, raised the idea of abolishing the comprehensive real estate tax. Ko stated, “We need to carefully weigh the benefits of maintaining versus abolishing the tax,” adding, “The comprehensive real estate tax has become symbolic, making the Democratic Party seem like a force attacking wealthy homeowners.” She suggested that to win power, the party must expand its appeal to moderates, which requires overcoming the comprehensive real estate tax issue.

Image sketch related to Jamsil 5 Complex Apartment. Photo by Yongjun Cho jun21@

The Democratic Party’s Dilemma

The Democratic Party’s official stance on reforming the comprehensive real estate tax is one of caution. Jin Sung-joon, the party’s Policy Committee Chair, has repeatedly stated that there are no official discussions underway regarding abolition. Despite remarks from the floor leader and top members, the party remains cautious due to the far-reaching implications of the issue. Some within the party argue that it is time to address the matter head-on. Choi Byung-chun, head of the New Growth Research Institute and former deputy director of the Democratic Research Institute, commented, “The comprehensive real estate tax reflects the worldview of Korea’s progressive forces who fought for democratization against dictatorship-namely, an anti-accumulation perspective. If the Democratic Party ever abolishes the tax, it would mark its transformation into a modern progressive party.” However, as the tax has become a symbol of ideology rather than just a fiscal policy, discussing its abolition is far from easy. The backlash was so intense that Ko Min-jung, who advocated for abolition, faced public criticism both inside and outside the party.

What Is the Position of the People Power Party?

The People Power Party also supports reforming the comprehensive real estate tax but is cautious about outright abolition. Given that the Presidential Office initially expressed a willingness to pursue abolition, the party’s prudence is noteworthy. Song Eonseok, a member of the People Power Party’s Special Committee on Fiscal and Tax Reform, stated after internal discussions, “There are opinions that the comprehensive real estate tax should be abolished or integrated into the property tax. However, if the 4.2 trillion won in comprehensive real estate tax collected last year is eliminated, local government funding-distributed from national tax revenues-will be reduced. If this shortfall cannot be compensated, local governments may oppose abolition.” In other words, abolishing the tax could further strain already tight local finances, which is a significant concern. The party also believes it is premature to discuss alternative funding measures on the assumption of abolition.

On the 12th, at the 1st discussion meeting of the Special Committee on Fiscal and Tax Reform held at the National Assembly titled 'Rational Reform Direction of the 1st Comprehensive Real Estate Tax,' Chairman Song Eonseok and Kim Byunghwan, the 1st Vice Minister of the Ministry of Economy and Finance, along with other ruling party and government participants, are taking a commemorative photo. This is the first time the ruling party and government have gathered in one place for follow-up discussions since the Presidential Office announced the tax reform policy, including the comprehensive real estate tax, at the end of last month. Photo by Kim Hyunmin kimhyun81@

Will the Presidential Office Push for Abolishing the Comprehensive Real Estate Tax?

The Presidential Office appears to favor abolishing the comprehensive real estate tax in the long term. While the ruling party is reportedly leaning toward major reforms rather than complete abolition due to concerns over reduced tax revenue, the Presidential Office maintains that the discussions are still ongoing. A Presidential Office official explained, “Although Representative Song summarized the meeting as focusing on reform, there were also opinions calling for abolition. The meeting was not intended to reach a final conclusion.” Since abolishing the comprehensive real estate tax was one of President Yoon’s campaign pledges, the Presidential Office believes further review is necessary, including the possibility of abolition.

However, concerns about the negative impact on local government finances if the tax is eased or abolished are also present in the Presidential Office. Because the comprehensive real estate tax, as a national tax, serves as a source for local government grants, any reduction or abolition would inevitably worsen local governments’ fiscal conditions. As an alternative, some have proposed raising the property tax rate-a local tax-while easing the comprehensive real estate tax, and using the increased property tax revenue to support local governments. However, this would require negotiations with large metropolitan areas that receive significant property tax revenue, which is also challenging. In fact, many within the government believe that it would be impossible to reach agreements with all local governments during the reform process. A Presidential Office official stated, “Since the tax law amendment bill will be submitted around July or August, further discussions and coordination between the ruling party and the government are needed. In the National Assembly, there will also be a process of persuading and compromising with the opposition.”

Will a Consensus Be Reached in This Year’s Tax Law Discussions?

The People Power Party, which will review the tax law, is focusing more on amending rather than abolishing the comprehensive real estate tax. Excluding owner-occupied single-home households-except for ultra-luxury homes-from the tax base is seen as a realistic approach, and negotiations with the opposition, which holds a majority in the Assembly, are considered possible. The Democratic Party has stated that it will present its position after the government announces the direction for next year’s tax law amendments in July. However, the overall atmosphere within the Democratic Party is skeptical, not only about abolition but even about raising the issue of reform. Nevertheless, the fact that some within the party have brought up the comprehensive real estate tax suggests that, while abolition is unlikely, the possibility of amendment remains open. Political observers predict that this issue will continue until the end of the year. Kim Kisik, head of the Institute for the Future of Democracy, commented, “When the tax law is handled as a supplementary bill during the year-end budget process, not only the comprehensive real estate tax but other bills will be discussed together. Whether partial revisions are made will depend on the outcome of negotiations between the ruling and opposition parties.”