President Lee: 'Broad Consensus on Strengthening Holding Tax, but Degree of Differentiation Matters'

President Lee Jae-myung said today (the 23rd), "There is generally a consensus that holding taxes need to be strengthened," adding, "What is important is the scope and degree of the reinforcement, and how to apply differentiation."

President Lee made the remarks during the National Public Debate on Real Estate Policy held at the KBS Annex.

President Lee stated, "Our society does not respect the wealthy. That seemed to be because there were many cases of people becoming rich through abnormal routes," and added, "Now that society has normalized, it seems necessary to respect people who become rich and pay high taxes on expensive homes."

This is interpreted as emphasizing that while individuals holding high-priced real estate should bear a heavier tax burden, including holding taxes, social respect for them should also be stronger than before.

Instead, he also mentioned that there are practical difficulties in this process.

President Lee said, "To raise holding taxes—though it's not actually a reinforcement, even if we just want to bring them up to the level of typical advanced countries—we would have to triple [them]. But if we triple them, wouldn't a situation close to a riot break out?" adding, "In fact, this is something that should have been done in the past, but now [housing prices] have risen too much."

He continued, "As a result, we ultimately have to compromise," while also adding, "However, I think we should prepare for future matters even now. It is a problem that will erupt someday."

He also mentioned the need for policy differentiation between single-home owners and multiple-home owners.

President Lee explained, "While we must implement protection policies for homes purchased for actual habitation, on the other hand, there are cases where multiple-home owners clearly aim for asset accumulation," and added, "If [someone purchases] multiple houses to make money, I believe differentiation should naturally be applied.

It seems unlikely that the public would disagree with this either."

He continued, "Then, what matters is the extent of [such differentiated measures]. Criteria such as how to define ultra-luxury housing are important," expressing the need for cautious debate by noting, "Judgment is difficult, and massive tax resistance could erupt."

Meanwhile, a participant suggested, "Holding taxes actually have the nature of income taxes. Higher [holding taxes] are levied as housing prices rise, which has the aspect of paying capital gains taxes in advance," and asked, "How about deducting the increase in holding taxes when calculating capital gains taxes?"

In response, President Lee answered, "It sounds like you are saying we should recognize holding tax [increases] as necessary expenses when calculating capital gains taxes, which makes sense," and added, "It would feel less unfair [when paying taxes]. It is worth considering."

Regarding supply policy, he mentioned, "For public rental housing, people imagine building 8-pyeong or 12-pyeong units like in the past for disadvantaged people to live in, but policies must change now," adding, "I hope high-quality apartments will be built centered around subway station areas."

He further stated, "A housing ladder is necessary, and providing long-term, high-quality public rental housing that even the middle class can move into is an important role that the state must play," adding, "Internally, we have plans to adjust the proportion in this direction."

He also expressed the need for cautious consideration regarding redevelopment, saying, "As for redevelopment, the question is whether raising the floor area ratio will help stabilize the housing market or, conversely, become an incentive for soaring housing prices."
 
(Photo: Yonhap News)
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