[EDITORIALS]Reform the property tax

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[EDITORIALS]Reform the property tax

Last month, the District Council of Yangcheon passed an ordinance that reduces property taxes retroactively. Since then, dissatisfaction over abrupt increases in real estate tax burdens and stark disparities in property taxes between districts north and south of the Han River have burst here and there in Seoul and its metropolitan area. In certain districts, there are even moves to sue over the tax increases.
The essence of the controversy over the property tax is simple. The property tax has risen too high, too soon, and the tax burdens are not balanced among districts, if they are compared on the basis of the properties’ market prices.
The rapid rise in property tax can be seen as an inevitable trend. In the course of turning the tax system on properties to the direction of “strengthening the tax on possession, and lowering the tax on transactions,” we cannot help but to accommodate the rise.
Although the tax burden rose more than four times than last year’s, taxpayers must admit that the taxes are less than one-tenth of a percent of the market price of property. Since the tax on possession has risen already, however, the government must provide a measure with which taxes on transaction ― acquisition, registration and sales ― are lowered as soon as possible.
The problem of disparity among districts was caused by the negligence of the central government and regional egoism of local governments. The government announced that the tax standard was to change from space size to market price, and then complicated adjustment rates were applied to calculate tax rates. As a result, a new house that is cheaper than an old one is heavily taxed only because it is new.
It is necessary to simplify the tax standards so that the principle of imposing tax according to market price is better served. Local government’s efforts to reduce the rate out of regional egoism will undermine the property tax system. They should be stopped.
The government must correct the disparity of tax burdens among districts as soon as possible. Even if it was imposed earlier, it should be corrected if it was a mistake. To prevent the intervention of regional egoism, it is time to consider changing the property tax from a local tax levied by district governments to one levied by municipal governments. In addition, the government must provide a plan to reform the property tax system to put a higher tax on possession and a lower one on transactions quickly.

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