[Letter to the editor]No common sense in additional taxNo common sense in additional tax
The deadline to pay additional taxes on home ownership is fast approaching. The tax, officially called the “comprehensive real estate tax,” is one of the Roh Moo-hyun administration’s efforts to rein in surging real estate prices by imposing heavy taxes on the “haves” of Korean society, who mostly live in upscale southern Seoul, particularly the Gangnam area. Those who have relatively smaller assets have relatively little against the tax.
Still, I have to point out some problems with the additional tax. First of all, the government said there is no problem in imposing the additional tax, because other countries such as the United States have systems that impose property taxes of up to 1 percent. However, in the case of the United States, property taxes go to local governments as income. The local government then uses the tax money to give direct benefits to its residents, such as education. This is why public schools in good neighborhoods have as good conditions as average private schools. Their children enjoy a high quality education and they don’t have to pay for additional private education. When children grow up and finish school, their parents tend to move to a place with low real estate prices, which means lower property taxes, because they don’t have to pay property taxes for the sake of their children’s education. In the case of Korea, however, the additional real estate tax goes to the national treasury, and there is almost no benefit for taxpayers. Also, the government takes the additional tax only in cash, unlike the property tax, which can be paid by credit card.
In addition, in some countries, you can get a tax refund for the amount of money paid in property taxes. However, that is not the case in Korea. I get the impression that the government is trying to put pressure on the taxpayers to surrender. It eludes my understanding why the government had to impose the additional tax on home owners, because there must be people who have worked and saved money all their lives just to have one apartment of their own.
Enforcement of the law, including the law governing real estate, should be done within the bounds of common sense.
Many people think there is a big real estate bubble. They think that Korea may follow the experience of Japan, which suffered the collapse of a bubble in the 1990s. I’d like to ask the government what it thinks about these scenarios. If a person pays 1 percent in property tax for home ownership every single year, and one day finds the price of his house suddenly falls or the population shrinks, which would be a reason for housing prices to drop, what happens to a homeowner who has been paying the additional tax expecting profit that will not be realized? When his housing price drops, it would only be wasted money. Sungzhin P. Lee,
Professor of music, Yeungnam University