[EDITORIALS]New tax needs convincingThe government is churning out follow-up measures to the broad-brush blueprint announced on Sept. 4 to deflate the bubbles in the nation's real estate market. Only a day after announcing that it will crack down on real estate agents engaging in speculation, the National Tax Service is moving to narrow the gap between the tax assessment price and the real price of property in the market.
We have repeatedly stressed that a bubble has set in, triggered by the speculation on apartments in Gangnam, southern Seoul, which spread to the suburban cities encompassing Seoul. We have on numerous occasions called for comprehensive action from the government. We have urged, in particular, changes in the taxation system to promote tax equality. In that vein, the decision by the Ministry of Govern-ment Administration and Home Affairs and the National Tax Service to raise the surcharge rate on property tax and the assessment, or standard price, a ruler used by the service to levy capital gains tax, is welcomed.
However, the latest measures are not without hurdles. First, the Ministry of Government Administration must convince the public and local governments, which will invariably protest the hike, of the need for the increase. By progressively scaling the surcharge rate, the ministry has laid out a plan to hike the property tax by up to 61 percent, depending on the size of the property. That is not a small hike by any standards. But the reality is that between comparable properties in Gangbuk, northern Seoul, and Gangnam, on which the tax agency has set a comparable standard price, the measure will have little effect, as the property tax in Gangbuk is higher than in Gangnam. This is not in line with the principle of promoting tax equality.
This is the NTS's second adjustment of the standard price, following one in May. It is like shutting the stable door after the steed has been stolen. The central tax agency in effect has admitted that its first adjustment was insufficient. As the agency has declared that it will readjust the standard price whenever needed, it must also come up with a system that ensures the readjustment is objective and accurate.