Seoul Mayor Oh Se-hoon recently offered the view that raising property holding taxes could cause side effects such as driving up real estate prices.
Oh Se-hoon said this on the 20th during the National Assembly Land Infrastructure and Transport Committee's audit of the Seoul Metropolitan Government held at Seoul City Hall, in response to a question from People Power Party lawmaker Eom Tae-young asking for his views on real estate-related taxation.
Lawmaker Eom Tae-young said, "In a situation with no new supply as now, there must at least be many existing listings coming to market to have a supply effect. The transaction tax should be reduced significantly or eliminated."
Oh said, "Tax policy must be cautious. In the news yesterday and today, I saw that Minister Koo Yun-cheol of the Ministry of Economy and Finance said something to the effect of raising holding taxes and lowering transaction taxes," adding, "If holding taxes are raised, dwellings prices could instead increase because of that, among other side effects."
On Oct. 16, Deputy Prime Minister and Minister of the Ministry of Economy and Finance Koo Yun-cheol suggested the possibility of an overhaul of the overall tax structure, including holding taxes and capital gains taxes, if the upward trend in home prices centered on the greater Seoul area is not contained.
Koo, the deputy prime minister, said, "Korea's current real estate taxation system has a low burden at the holding stage and a heavy burden at the transfer stage," adding, "Because of this, the 'lock-in effect' has intensified, and listings are not coming onto the market."
At the audit that day, in response to comments that there needs to be close consultation between the Ministry of Land, Infrastructure and Transport and the Seoul Metropolitan Government on real estate policy, Oh said, "I am aware of concerns about policy mismatches between the central government and the Seoul Metropolitan Government," adding, "Fundamentally, I think our perception is the same, but the government is focused on suppressing demand, while the city is focused on supply."
He added, "We have continued to request the removal of factors that hinder redevelopment projects."