[EDITORIALS]Ending property tax debateDebate about the inequity of the property tax schedule has become an annual exercise. That we did not reach a satisfactory conclusion during the last round of debate indicates that nothing has changed in the way the government does business. The new administration’s election promise is not likely to be realized this year.
There is nothing new about the complaint that the property tax schedule does not reflect the reality of the market. Large gaps in values according to location are not reflected, and inequity is particularly sharp for property owners in Seoul north of the Han River. A point in case is a 43-square-meter (460-square-feet) apartment in Gaepo-dong in the Gangnam district ― slated for reconstruction. Its price, which is inflated to reflect the expected value of the new apartment to replace it -- 450 million won ($380,000). The property owner, however, is assessed just 13,000 won in property taxes. An apartment in northern Seoul, which is nearly four times as large, is valued at 500 million won. The property tax is 234,000 won.
This case demonstrates the inequity, which arises from the fact that assessments are based on the age of the property and floor area, not market value. Age and size determine the taxes due. Of course it is not an easy job to provide for equity in the property tax schedule. The best solution would be to levy taxes based on market values, but it is nearly impossible to put together such a database nationwide. But we can’t leave the tax schedule as it is. That would be negligence on the part of the government, continuing the injustice against certain property owners. Tax revolts are stronger in the face of inequity than protesting excessive tax burdens.
A quick way to correct the inequity would be to use the National Tax Service’s database on capital gains tax valuation -- which is a better reflection of property values -- to levy property taxes. And using an already established database will ease any resistance to change. It is also time to consolidate property taxes on land and buildings, which are now levied separately, eliminating another source of inequity in taxation.