[EDITORIALS]Local egoism runs amokAn increasing number of local governments are lowering the rates of property taxes. In May, 13 local governments, including Seoul’s Gangnam district, decided to lower the property tax rates, and many of them have already refunded the balance to taxpayers. The local governments are all in Seoul and the Seoul metropolitan area.
This trend of lowering property tax rates is not desirable. The local governments cite the cause of their decision as being the rapid hike of property tax rates and keeping relative balance with other districts. Gangnam district lowered the rate first, citing excessive hikes of tax rates. Then other districts followed suit under the excuse of keeping balance with Gangnam, where many expensive housing units are concentrated. This is a typical act of seeking regional egoism of local politicians, who only think of the interest of their constituents, ignoring national real estate policy.
The irresponsible response of the central government and metropolitan and provincial governments, including the Seoul Metropolitan Government, have worsened the situation. The conflict over the property tax has a long history. Residents reacted strongly against property tax increases years ago. Nevertheless, the central government and metropolitan city and provincial governments neglected to take measures or make legal provisions that could minimize the aftereffects of rapid tax increases, saying that the government would “increase taxes on property possession but lower the tax on transactions.” Because of this, the central and regional governments had no leverage over the lower-level local governments, although they lowered property tax rates with the rights delegated by the local autonomy law.
Now is the time to reconsider the concept that the tax on properties is a local tax. Especially if the government intends to maintain the policy of high taxes on possession but lower taxes on property transactions, it must change the property tax to a national tax or at least a tax levied by metropolitan or provincial governments. The association of district heads of Seoul city claims that the property tax is levied by the district governments in other countries. But considering the weight of the property tax in real estate policy, leaving the decision on property taxes in the hands of local politicians who are swayed by local egoism is giving up the policy of levying high taxes on property possession.