Roh’s tax bomb
Ever since the central government adopted the consolidated real estate tax, which was imposed on people who owned a house worth more than 600 million won ($651,000), worries about heavy taxation have become reality.
A “tax bomb” will hit 486,000 people this year, with a 38 percent increase from a year ago, according to National Tax Service.
The government expects to collect 2.8 trillion won ($304 million) this year, a 65.3 percent increase from a year earlier.
People who receive a tax notice will realize that President Roh Moo-hyun’s remark related to the newly launched tax ― “Take the consolidated real estate tax seriously” ― was not an empty threat.
Much of the reason for the sharp increase in the number of people affected by the tax and the increased tax revenue this year can be explained by the changed taxation rules.
Although housing prices been relatively stable this year, last year’s rise in home values were added to this year’s standard real estate prices, which are the basis for real estate taxation.
In addition, taxpayers need to pay the tax on 80 percent of the standard price this year instead of 70 percent last year.
To make matters worse, homeowners will likely be taxed on 90 percent of the standard price next year, and 100 percent the year after next.
With this snowballing taxation, homeowners are bound to be battered by the tax bomb, even though the value of their homes remains the same. Without considering a homeowner’s income or ability to afford the tax, the central government should not abuse its right to collect taxes just because people have expensive houses.
We agree about the need to implement the real estate ownership tax rate. However, if people have to pay property taxes along with the punitive consolidated real estate tax, it distorts the taxation system as well as undermines the equality of taxation. The next government should reconsider the consolidated real estate tax.
If it is hard to suddenly change the consolidated real estate tax, there should be some measures to ease the burden of taxpayers.
The consolidated real estate tax should be lessened for the 38.7 percent of the total consolidated real estate taxpayers, or 147,000 people, who own only one house. The taxation criterion of 600 million won also should be raised to 900 million won. Such a hefty tax is too harsh for people who only own one house.