Fixing tax loopholesTax levies must be accurate to every cent. The saying, “Nothing is certain but death and taxes,” is based on the grounds that taxes are just and transparent. Drivers dutifully pay their fines for speeding, because they know that it is their responsibility to do so. Such civilian duty to law and order stems from confidence in public administration. Taxation must be most fair.
The news of flaws in state appraisals on homes last year therefore come as a shock. Taxpayers are outraged to learn about inaccurateness in taxation. The Board of Audit and Inspection (BAI) discovered that land prices were higher than the combined value of property and land in 228,475 homes across the country last year. How can land prices be higher than total home value?
The BAI inspection was triggered after a civilian group petitioned in February last year for an investigation on state appraisal as the registered value was often below the market prices. The BAI found a number of problems in the appraisal system. Even the divisions calculating home prices and land prices were different. Their guidelines to determine land and house prices also did not match due to different numbers of their samples. Moreover, the final appraisal did not reflect the purpose of the land use in evaluation, even as it is a determinant factor in appraising property value.
The findings did not include apartments and multi-residential units, which means that appraisal errors could be even greater. State appraisal prices become the base for property taxes, insurance premiums and other social taxes. The valuation has often been questioned. Over 37,000 people have filed complaints against multi-residential home appraisal prices announced by the government in March.
People put their lifelong savings into a home. How many can willingly comply with higher taxes if appraisals are made recklessly? Complaints about home value appraisals surged tenfold last year from a year ago, suggesting brewing public disgruntlement. If consistency and security is not ensured, tax resistance will increase.
The government must do its best to restore confidence in taxation. The BAI pointed out that over 430,000 land lots have not been properly appraised. The government must fix the loopholes in appraisal and taxation.
JoongAng Ilbo, May 21, Page 34
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