[EDITORIALS]Stop the tax tug-of-war

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[EDITORIALS]Stop the tax tug-of-war

It is regrettable that 25 district offices in Seoul rejected in unison the central government's plan to raise property taxes on apartment houses in highly-speculative areas in order to curb surging home prices. Their opposition has made it more difficult to raise property taxes. There is also concern that the move may set a precedent, in which such collective resistance by local governments thwarts the implementation of the central government's coherent real-estate policy.

Raising property taxes has been a highly controversial issue since last year, when the speculative real-estate investment boom peaked, prompting the central government to increase home ownership taxes. The problem is the indecisiveness shown by the Ministry of Government Administration and Home Affairs, which will set the property tax rate.

The ministry dragged its feet, saying that it was hard to lift the rate sharply before the Dec. 19 presidential election. After the national poll, the ministry informed local governments of the final proposal for a hike in property taxes by 4 percent to 30 percent, down significantly from the initially planned increase rates of 23 percent to 50 percent. In addition to the weakened determination to raise property taxes, the ministry has left it up to the discretion of each local government.

The heads of the Seoul district offices were also too selfish. They say that they turned down the tax hike proposal because the local real-estate market is showing signs of cooling down. But raising property taxes is an effective tool to prevent real-estate speculation preemptively. The district office of Seoul's highly-speculative Gangnam-gu went as far as to carry out an opinion poll on the proposed property tax hike. Such an attempt is ridiculous, because few people ever favor tax increases.

The central government should not leave it up to local governments to determine the fate of a policy intended to prevent real-estate speculation. It is time to consider turning property taxes -- collected and spent by local governments --into national taxes, which belong to the coffers of the central government.
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