Guri City Council Unanimously Adopts Proposal to Expand Capital Gains Tax Reduction for Public Development Projects

Chairman Shin Dong-hwa Raises Issue at Gyeonggi Northern City and County Chairpersons' Council
"Special and Fair Compensation Needed for Special Sacrifices for the Public Interest"

On the 10th, the Guri City Council (Chairman Shin Dong-hwa) unanimously adopted the "Resolution Urging the Expansion of Capital Gains Tax Reduction on Compensation for Land, etc. Due to Public Development Projects" submitted to the Northern Gyeonggi Province City and County Chairmen's Council held in the Guri City Council multi-room.

Shin Dong-hwa, Chairman of Guri City Council. Provided by Guri City

This resolution states that the government excessively imposes capital gains tax when forcibly acquiring individuals' land, etc. while implementing public development projects, and urges the expansion of capital gains tax reductions through amendments to the "Restriction of Special Taxation Act" to urgently improve this situation.

Chairman Shin Dong-hwa stated in the resolution that currently, when forced acquisition is carried out due to public development projects, cash compensation is reduced by 10%, and bond compensation is reduced by 15% to 40%, and even this is limited to 100 million KRW per year and a maximum of 200 million KRW over five years, causing great resentment among landowners who have lost their land due to forced and undervalued compensation.

Chairman Shin pointed out the unfortunate reality that most of the land subject to public development projects is designated as a development-restricted zone, severely limiting individuals' property rights, and since the land has been used as farmland for decades, the acquisition cost is set very low, resulting in more than 90% of the compensation amount being calculated as capital gains.

Accordingly, considering the difficulties in promoting public development projects due to opposition from existing residents, he argued that institutional improvements are urgently needed to realize the "just compensation" stipulated in the Constitution.

In particular, the Topyeong 2 Public Housing District in Guri City, except for some areas incorporated as residential zones in 2006, is about 92% designated as a development-restricted zone, where land transactions and utilization have been extremely limited for half a century. He emphasized that this has created a contradiction where the period during which property rights were restricted due to capital gains being calculated almost equivalent to the entire land compensation amount has become a stumbling block.

Finally, Chairman Shin said, "Special and just compensation is absolutely necessary for special sacrifices for the public interest," and added, "I hope that institutional improvements will be made promptly so that residents of public development areas do not suffer from excessive capital gains tax."

Meanwhile, according to Article 23, Paragraph 3 of the Constitution of the Republic of Korea, when property rights are expropriated for public necessity, "just compensation" must be provided to prevent any disadvantage, and it has been confirmed that until 1989, capital gains tax on land for public projects was fully exempted under the "Tax Reduction and Exemption Control Act."