Property Tax That Burdens the Public Must Be Reconsidered from Scratch

The harmful effects of the Comprehensive Real Estate Holding Tax have become so excessive that controversy never ceases. Public backlash continues against collecting taxes as if they were fines, and social distrust of tax administration is growing. The National Assembly appears to have neither the will nor the ability to correct this flawed tax.

Imposing punitive taxes on a small minority is the product of divisive politics. Levying this tax in a way that says it will thoroughly punish those subject to the Comprehensive Real Estate Holding Tax on the grounds that they are the top 1 percent who own expensive homes is an act of turning the people against one another for partisan gain. It may benefit political forces seeking to make the wealthy into symbols of evil, but it is nothing more than low-grade political warfare that uses a small number of people as political scapegoats and divides the public.

Excessive taxation on real estate is wrong because it departs from the nature of both real estate and taxation. Treating even those who own a single home as wealthy endangers the order of our lives. Buying a home and preparing for old age are things any responsible member of society would want to do and rightly ought to do. In any normal country that does not aspire to socialism, encouraging citizens to buy homes, and even supporting them, is necessary. It is reasonable for the government not to tax people for purchasing and maintaining a single home.

The government has taken a negative view of the ownership, use, and transaction of real estate by the people and has indiscriminately imposed regulations that suppress these activities. In addition to the Comprehensive Real Estate Holding Tax, countless regulations and taxes have accumulated, leaving the real estate market in an abnormal state. As a result, citizens have found it difficult to improve their housing welfare. Because the government’s housing policy has failed in both quantitative and qualitative terms, improvements in residents’ housing services have not been achieved. The inconvenience caused by being unable to make transactions, and the welfare losses caused by being unable to move to better places, are also enormous.

When taxes on homes are wrong, negative public perceptions of tax administration and the state increase. This is the natural result of a government that ought to protect the lives and property rights of the people instead treating them as adversaries and threatening their property rights.

As public opposition has grown, the National Assembly now says it will revise some provisions of the Comprehensive Real Estate Holding Tax Act. It seeks to raise the basic deduction threshold for the tax for one-household, one-home owners from an officially assessed value of 1.1 billion won to 1.4 billion won. This is a stopgap, improvised response meant to temporarily patch over the problem. It is certainly a problem that the amount of the basic deduction does not reflect real estate market prices, but this also reveals a lack of willingness to overhaul the flawed tax structure of the Comprehensive Real Estate Holding Tax itself.

Once created, a tax is not easy to abolish. Because this tax is rooted in envy, one aspect of human nature, politicians are reluctant to step forward and reform it no matter how great its social harm may be. Moreover, if partisan interest groups obstruct the process, tax reform becomes an even more difficult task. Because its side effects are so great, controversy over the Comprehensive Real Estate Holding Tax will continue. What is clear is that a tax that harms the well-being of the people and the order of the state will one day disappear. The normalization process will inevitably take place, even if it takes time and involves twists and turns. Human history has advanced by overcoming the hardships caused by such misguided experimentalism.

Collecting taxes properly is a basic function of the state. The National Assembly must faithfully engage in politics for the people and the nation. It is unjust to make the tax system and the people into scapegoats for partisan gain. Only when taxation is grounded in proper principles can citizens fulfill their duty to pay taxes while also taking pride in their country. Since it has become clear that the Comprehensive Real Estate Holding Tax departs from the principles of taxation and is a flawed tax that obstructs national unity, it should either be abolished or fundamentally overhauled. It is time to reexamine the Comprehensive Real Estate Holding Tax from the ground up.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: 국민 괴롭히는 종부세, 원점 재검토해야

Author: Sung-no Choi

Date: 2022-08-29

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=24933