NATION'S KEY TAX ISSUES

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With the year's end approaching, South Korea is seeing disputes over two key tax issues. They're related to the standards of imposing property tax and to define large shareholders of companies. The government and the ruling party have reportedly agreed to lower property tax for single-home owners of houses worth up to 600 million won. But they failed to find common ground over raising the tax on capital gains from stock transactions.

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On October 28th, the ruling Democratic Party vowed to draw a conclusion on the two tax issues as quickly as possible. Over the weekend, officials from the ruling party, government and presidential office held a heated debate for four hours. Following the meeting, DP Chairman Lee Nak-yon said the three sides neared an agreement in a broad framework. But he added that the government, not the ruling party, will announce the measures. The DP is collecting opinions from local governments about lowering property tax for single-home owners, since it can reduce local government tax revenues. The ruling party and the government reached a tentative agreement on lowering the tax for houses worth less than a declared value of 600 million won as proposed by the government. During the meeting, the DP backed a proposal to tax houses worth 900 million won or less. New standards to tax capital gains from stock transactions will likely be announced separately, as the upcoming U.S. presidential election will have an impact on the stock market. Regarding the stock transaction tax, the government has apparently accepted the ruling party's proposal to temporarily halt its push to define individuals who own stocks worth over 500 million as large stockholders. The DP wants to win a concession from the government due to the tax code revision's potential repercussions on next year's by-elections.

[Soundbite] KIM TAE-NYEON(DP FLOOR LEADER(OCT.27)) : "Our party will discuss with the government and make sure property tax does not sharply increase for people who own just one low- or mid-priced home."

The main opposition People Power Party urged the government and ruling party to acknowledge their failures in real estate policies and correct them immediately.
The minor opposition Justice Party criticized the lower taxation criteria as a strategy to win elections.