Kim Yong-beom, the Blue House policy chief, on the 20th said that if the national wealth created by the semiconductor industry flows into unearned income from real estate, it will be hard to sustain the economic boom, stressing the need to adjust the real estate tax system. He added that how to allocate and use record-high tax revenue will be the key task for the economy going forward.
On the morning of the day, the policy chief Kim posted on Facebook an essay titled "The euphoria, unfamiliarity, and fear of a high-teens nominal economy" and assessed the current economic situation. He said, "This year Korea's nominal GDP growth rate will surpass double digits," adding, "It's been a long time since we last felt what a high-teens nominal growth rate is like."
He went on, "By the second half, the mood is highly likely to change noticeably," adding, "Luxury consumption could revive, and buying sentiment for real estate in preferred areas may start to stir again." He was voicing concern about the possibility that, in a liquidity recovery phase, the asset might flow excessively into real estate.
The policy chief Kim said, "Korea's economy has experienced scenes like this many times over the past decades," adding, "We have also learned collectively about where liquidity ultimately heads." He said, "Looking back, such money has tended to end up flowing into the real estate market repeatedly," adding, "It is hard to confidently say this time will be an exception."
He added, "We need to normalize real estate taxation," and said, "It is necessary and the right direction to rationally adjust property taxes and capital gains taxes."
However, he saw limits to responding with real estate taxation alone. The policy chief Kim said, "If high nominal growth continues, interest rates will rise, and the self-employed, vulnerable borrowers, and variable-rate borrowers who do not feel the boom first are highly likely to wobble."
The policy chief Kim said, "The key is where to channel the money," adding, "If the national wealth earned by semiconductors is absorbed as unearned income from real estate and the fruits of growth are concentrated only among a few, this boom will not last long." He added, "An unprecedented boom demands imagination worthy of it," and said, "We also need the execution capacity to turn that imagination into reality."