Less than a month after the government announced its tax reform plan on August 3, a revised proposal has emerged, but the backlash continues.
Typically, when a policy is introduced, there are beneficiaries and those who suffer losses, leading to a debate over whether the positive effects outweigh the negative. Strangely, this tax reform plan has drawn complaints from multiple groups, including homeowners with multiple properties, single-homeowners, and tenants.
It is natural for the primary victims of the tax reform—owners of high-value homes exceeding 3.5 billion won and non-resident single-homeowners—to express dissatisfaction, as no one is eager to pay taxes. However, even resident single-homeowners, who might expect tax relief, are unhappy, and tenants, who do not pay taxes, are increasingly anxious.
Resident single-homeowners can become non-resident homeowners at any time, leading to frustration over restrictions on their freedom to relocate. Tenants are worried about when landlords will call them to move into properties they have rented out to others to reduce their tax burden.
Following the October 15 measures last year, which designated areas across Seoul and parts of Gyeonggi Province as land transaction permission zones, the rental market has sharply contracted, making it increasingly difficult to find rental properties, while monthly rent prices have skyrocketed.
In this climate of uncertainty for both landlords and tenants, it is evident that the government stands to benefit from increased tax revenue. Yet, with declining presidential approval ratings, one might question whether these policies truly serve the government’s interests.
It is essential to consider who the tax reform plan is intended to benefit. The government's focus on 'Living' rather than 'Buying' appears just, advocating for residents to own homes rather than speculative properties. However, this philosophy, rooted in the notion that owning a non-residential property is speculative, overlooks reality and is excessively idealistic.
It is unjust for long-term residents to face tax burdens simply because they own high-value homes. Imposing sudden, unmanageable property taxes on homes that have not been sold is never appropriate. A home owned for a lifetime is akin to a family's legacy, and the idea of reducing long-term capital gains tax exemptions to reclaim taxes is incompatible with a capitalist society.
It is inappropriate to suggest that those unaffected by these issues can simply sell their expensive homes. The same applies to non-resident single-homeowners. A tenant in Busan who purchased an apartment in Seoul several years ago with a lease is unlikely to qualify for exceptions. The gap in housing prices between Seoul and Busan is widening, and it is not a grave offense to secure a home in advance for a child attending university in Seoul.
The government claims it will expand exceptions, but each individual has unique circumstances and reasons. The president himself referred to his sold home in Bundang as one with personal significance, and citizens also have their own memories and stories tied to their homes.
Alarmed by public discontent, the government hastily revised the tax reform plan, reducing the exemption amount for non-resident single-homeowners from 900 million won to 1.2 billion won and restoring the tax burden cap from 200% to 150%. However, such patchwork solutions will not win back the trust of the public.
During the presidential campaign, there were promises not to control housing prices through taxes, yet the sudden implementation of increased capital gains taxes on multiple homeowners and significant adjustments to comprehensive real estate taxes and long-term capital gains tax exemptions have left the market in turmoil and uncertainty.
The current rental crisis was a foreseeable disaster. With a significant decrease in available housing and restrictions on land transactions that compel residency, along with barriers to purchasing homes, it is unreasonable to penalize landlords for not residing in their rental properties.
Without sufficient housing supply or stability in the rental market, hastily changing housing policies will inevitably lead to severe side effects, with tenants—who are the most vulnerable—bearing the brunt of the consequences. If the government expected tenants to remain safe while pressuring landlords, it reflects either ignorance or indifference.
Ultimately, the current administration has abandoned tenants without homes. The tax reform plan, which has dissatisfied both landlords and tenants, now rests in the hands of Parliament. The government is not a racehorse that can only look forward. If it becomes trapped in the opinions of a few like-minded supporters, it risks steering the nation off course.
Will the government continue to race toward the mountaintop, or will it return to the sea? The direction of national policy now depends on the Parliament, which holds the surgical knife for the tax reform plan. We hope for a rational tax reform focused on the housing stability of the majority of citizens, rather than ideological considerations.
* This article has been translated by AI.
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