Home is where the taxes are
The author is a columnist of the JoongAng Ilbo.
The housing market is reheating. Prices of properties in satellite areas to be connected to Seoul by the new GTX (Great Train Express) fast railway have inspired the market. Many had feared another run when Deputy Prime Minister for the Economy Hong Nam-ki predicted housing prices to fall. It was a kind of voodoo. Whenever a senior government official issued a warning or prophesy about the housing market, it had gone the opposite. Those who had squeezed out loans to buy homes proved right and the former land minister who had pitied them proved wrong. Those who listened to government officials can no longer dream of ever owning a home. And those who had kept to a single home by closely following the government guidance are subject to heavy property taxes and cannot sell them due to higher capital gains tax from inflated prices. Yet, the tax bill is expected to get fatter.
The liberal Moon Jae-in administration has entirely lost public confidence. It has repeatedly advised people to wait as prices would go down. (But it could have secretly been enjoying the asset inflation.) It had promised mammoth supply, but the plan has gone astray. The outline to provide 4,000 units in the former government complex in Gwacheon has been scrapped due to the opposition of residents. The government could not have overlooked resistance from residents. Similar supply outlines for Taereung Golf Course and Yongsan may end up the same. People are suspecting the government is intentionally letting the runaway housing prices be. Why the campaign to reign in housing prices suddenly lost steam was baffling until the ruling Democratic Party (DP) came up with the idea of levying the comprehensive property tax on the most expensive 2 percent of properties.
There had been some faith in the government’s tax bombardment to help stabilize the real estate market. It had sounded as if the move entirely was for the ordinary people. But even after backtracking from the tax offensive, the government was not admitting it had erred. All the grand talk about confidence in stabilizing the real estate market could have been a bluff. The government had promised to ease the comprehensive property tax before the April 15 parliamentary elections last year, but it scrapped it.
It is not just the real estate market. The broad 98 percent of the population has been scarred by a widened gap in education, income and living standards. The government has worsened the inequalities. All the data except for that on the rich deteriorated. There is only rhetoric about things getting better. It flags data from a different methodologies upon seating a government-loyal chief at the statistics office. But even President Moon admitted inequalities have deepened due to worsened conditions for the people in the lower-income groups.
Before he ran in the presidential election, Moon had traveled to Nepal and Bhutan. He argued a government role is meaningless if it cannot make the people happy. But the happiness index plummeted under his administration. The index is at its worst since the data were first compiled in 2003. Compared with major economies, it is at the bottom. No country can be happy with a widened wealth gap and worsening conflict. A government claiming to serve the ordinary people should have made their lives better. If it had aimed to narrow the gap, it should have concentrated on bettering the lives of the people in the lower income category instead of attacking the rich.
People are not asking to be house-rich. They just want a home and rents to become affordable. Going the opposite of the past conservative government cannot be the answer. People want electric power supply and rate stability by ending its plan to phase out of nuclear reactors. They wish to see public policies that help their lives. A government working for them must hear their voices.
“Pull the string, and it will follow wherever you wish. Push it, and it will go nowhere at all,” said former U.S. President Dwight Eisenhower. A leader must guide, not force. People can regain hopes of owning a home under such leadership.