Koo Yun-cheol, Deputy Prime Minister for Economic Affairs and Minister of the Ministry of Economy and Finance, said, "Property holding taxes can be either real estate policy or ability-to-pay taxation (taxation aligned with the capacity to pay)."
Koo answered this way when asked about the possibility of raising property holding taxes at a press briefing held Oct. 16 (local time) at the International Monetary Fund (IMF) office in Washington, D.C.
Koo said, "In Korea, holding taxes are low and capital gains taxes are high, so the locking effect is significant," adding, "If holding high-priced dwellings becomes burdensome, people will not try to hold them as they do now."
He also said, "In that respect, (holding taxes) are ability-to-pay taxation," adding, "We will commission research to review how to handle the tax system at an appropriate timing and will hear from experts."
On Oct. 15, the government announced measures to stabilize the housing market centered on imposing an owner-occupancy requirement when purchasing dwellings across Seoul and in 12 areas of Gyeonggi Province, including Gwacheon and Seongnam.
The measures also included setting mortgage loan limits by dwelling price, but excluded tax policy. The government only said it would review the specific direction of tax reform by comprehensively considering tax equity and other factors.
Koo stressed that the target of real estate policy is not limited to owners of multiple dwellings. Koo said, "We also need to look at high-priced dwellings." He sees a problem in the fact that the tax burden of owning three dwellings worth 500 million won each is heavier than owning one dwelling worth 5 billion won.
Koo said, "(Real estate policy) must gain public consensus," adding, "We will see which direction aligns with fairness."
Meanwhile, regarding the reorganization in January next year in which the Ministry of Economy and Finance will be split into the Ministry of Finance and Economy in charge of economic policy and the Ministry of Planning and Budget in charge of the budget, Koo said, "I fully understand the parts that staff are concerned about."
With the budget function separated, the Ministry of Economy and Finance will be left with only the tax system as a policy tool it can directly use. Within the ministry, concern is widespread that it will be difficult to play the role of the lead economic ministry.
Koo said, "From the standpoint of the Economic Policy Bureau and the Policy Coordination Bureau, there is an enormous difference between having the budget (within the ministry) and not having it," adding, "I cannot say the work situation after the reorganization will be better than now."
Koo went on to say, "We will meet frequently (with the budget office) through various councils to build consensus," adding, "We will operate in the best way possible under the separated arrangement."