Revised tax bill slated for next yearA national comprehensive real estate tax will be levied by local governments starting next year, helping cash-strapped local entities achieve financial stability.
The Ministry of Strategy and Finance and the Ministry of Security and Public Administration announced yesterday that they have submitted a revised tax bill to the National Assembly to incorporate the central government’s comprehensive tax in the general property tax that has been levied by local governments from next year.
The move comes amid continuing complaints from local governments about halved property acquisition tax rates, part of the government’s last-ditch measures to boost the moribund real estate market in August. The acquisition tax was a major source of local governments’ tax revenues, along with the property tax.
The government had promised local governors that it would promptly seek a measure to help make up for their falling tax revenues. Local governments depend on the acquisition tax for 26 percent of their tax revenue, according to the Security Ministry.
Saenuri Party lawmakers last week finally agreed on the government’s proposal to permanently reduce the property acquisition tax. The tax cut would be applied retroactively to purchases since Aug. 28. The tax cut, if applied, is expected to cost local governments about 780 billion won ($727 million) this year. The comprehensive real estate tax, which took effect in 2005, was introduced to contain speculative bubbles in the housing market.
Under the comprehensive tax law, the tax authority levies a 0.5 percent tax on the value of a home for owners of residences priced at 600 million won or less, a 0.75 percent tax on houses priced between 600 million won and 1.2 billion won, and a 1 percent tax on houses between 1.2 billion won and 5 billion won. Owners of property valued at more than 500 million won will also pay.
BY SONG SU-HYUN [firstname.lastname@example.org]