[EDITORIALS]Not much of a stepThe administration said it would reduce the tax burden of the general public by reducing property taxes on homeowners whose apartments are worth less than 600 million won ($630 million). This was a result of an agreement made by President Roh Moo-hyun and the Uri Party.
It is disappointing, though, that lowering the property tax was the strategy that the president came up with. Mr. Roh is responsible for many failed policies, and the ruling party was routed by the voters in local elections last month. The tax change is not likely to win over those voters.
The party and administration are correct in their understanding that the failure of their real estate policies, which center on higher taxes, were one of the biggest complaints voters had. The biggest problem with the real estate policies was that, in an effort to prevent inflation in housing prices in Seoul’s southern districts, it recklessly raised the tax burden on everyone.
We have argued that the administration must reduce taxes on real estate transactions and increase the annual property taxes, except those applied to persons who own only one apartment.
But the new measure announced by the administration yesterday may not do much to assuage people here.
Setting 600 million won as the standard for who pays more taxes and who pays less could stir charges of discrimination. And property tax payments by people who own apartments worth less than 600 million won are so low that taxpayers will save little or no money, and homeowners whose dwellings are worth more than 600 million won could easily tolerate a higher tax burden.
The move, it appears, is just some window-dressing by an administration that hasn’t stopped to think about the reasons its real estate tax policies failed.
If it wants to soothe public anger, it should reorganize the entire real estate tax system to make it more practical. A good first step would be to lower the tax on apartment transactions and the profits earned during such transactions.