Real estate tax backfiresGovernment policies have prompted disruption and discord. There are many of them. A good example is real estate policy, and the best example of all is the comprehensive real estate tax. The government tacitly divided those who pay the tax and those who don’t, and now it is about to quarrel with local governments to use the money.
The government is saying local governments will have limited discretion in using the tax money, and it is allocating the money for education and social welfare. By doing that, the government could reduce education and social welfare-related expenditures from its own budget.
The government might as well be greedy as the tax is as much as 2.9 trillion won ($3.1 billion) this year. This administration pursued a big government and huge government projects and increased the number of public servants. Thus, even if the government took all the real estate tax money, it still might be insufficient.
There are also conflicts within local governments. Districts in southern Seoul and northern Seoul are having disputes over how to share the tax money. The central and local governments are pouncing on the tax as if they found some easy money. Employees with only one house and old retirees who have trouble paying the tax must feel dumbfounded. However, the voice of reflection and the sense of responsibility for the failed real estate policy is already long gone. Even the minister of economy and the prime minister are making fun of their countrymen, saying, “If you are afraid of the tax, sell your house and move to a different place.”
The comprehensive real estate tax was born with a limit. It makes common sense to provide more housing and to curb liquidity to stop runaway real estate prices. The government, however, chose a populist policy to create an enormous tax.
The prescription was wrong from the beginning. Meanwhile, the tax is not holding back housing prices but is punishing home owners. Now the government dares to say it wants to cover insufficient tax revenue with the real estate tax. The government is not only passing over its responsibility to taxpayers, but it is also raising taxes. It is like killing two birds with one stone.
When collecting tax, the government should be anxious. Of course, the government should levy taxes according to the economic ability of individuals. Levying taxes without careful consideration and dividing the country is the worst policy of all. This is also a lesson for our history.