REAL ESTATE TAX TO BE DECREASED

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The threshold on the comprehensive real estate tax for single homeowners will be raised from the current 900 million won to 1.1 billion won to ease the tax burden. The ruling Democratic Party originally sought to impose the tax not based on the price range but on the top two percent most expensive properties which is an unprecedented method. However it eventually backtracked from the stance.

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A parliamentary finance committee has passed revisions to the comprehensive real estate tax law, the key to which is easing the tax burden for owners of a single home. The revision calls for raising the tax base from 900 million won to 1.1 billion won in the government-assessed value of properties. This means people owning homes that exceed about 1.6 billion won in market value will be subject to paying the comprehensive real estate tax. The ruling DP initially pushed for a base limit that only includes the top two percent of most expensive homes, regardless of the price range. It was a method yet unheard of which sparked opposition from lawmakers.

[Soundbite] Kim Jin-pyo(Chair, DP special committee on real estate(interview with KBS radio program in June)) : "Taxing the top 2% of most expensive homes, regardless of price fluctuations, actually raises the predictability in taxation."

But eventually, the DP accepted criticism that the top 2 percent threshold ran counter to the country's tax system. The ruling party argued the 1.1 billion limit and the 2% barometer were basically the same and would tax the same group of people. But this argument would only apply if home prices remain the same. Under the new revision, 89-thousand single homeowners will be exempt from paying tax this year while others with more pricey homes will see a reduced tax burden.

[Soundbite] Jang Hye-young(Justice Party lawmaker) : "If the revision fuels homeowners’ preference for high-end properties, how can the market be stabilized?"

There’s backlash even within the DP saying the revision is a tax cut for the wealthy.

[Soundbite] Kim Kyung-hyup(Democratic Party lawmaker) : "It’s an attempt to ease the tax yet again, making it a mediocre wealth tax, in hopes to attract more votes."

The revised bill will be finalized next week through votes at the Legislation and Judiciary Committee and the Assembly plenary session.