President Lee: Broad Agreement on Strengthening Holding Taxes, but Scope and Differentiation Are Key

President Lee Jae-myung stated, "There is generally a broad consensus that holding taxes need to be strengthened," adding, "What matters now is the extent and degree to which we strengthen them, and how we apply differentiation."

During the National Public Debate on Real Estate Policy held this morning (the 23rd), President Lee said, "Our society has not respected the wealthy. That seems to be because there were many cases of people becoming wealthy through corruption or abnormal routes." He continued, "Now that society has normalized, it seems necessary to respect those who become wealthy and pay high taxes on expensive homes."

He then noted, "Even if we try to raise (holding taxes) to the level of typical advanced nations, we would need to triple them. However, if we triple them, wouldn't something akin to a riot break out?" He added, "In fact, this is something that should have been done in the past, but the levels have already risen too high now."

This was an acknowledgment that while there is a shared consensus on increasing the tax burden for high-end real estate owners, practical difficulties exist in the process.

President Lee also explained, "While we must implement protective policies for homes purchased for actual habitation, there are clearly cases among multiple homeowners where the purpose is asset accumulation." He added, "For those who buy multiple homes to make money, I believe differentiation should naturally be applied. I don't think the public would disagree with this."

This emphasized the necessity of policy differentiation between single-home and multi-home owners.

He went on to say that the degree of differentiation is crucial, noting, "For example, what standards should we set for ultra-luxury housing?" He expressed the need for careful discussion, stating, "It is a difficult judgment to make, and it could trigger massive tax resistance."

Regarding supply policies, President Lee mentioned, "In the case of public rental housing, people imagine units built as 8 pyeong or 12 pyeong like in the past for disadvantaged people to live in, but our policy needs to change now." He added, "I hope to see high-quality apartments built centering around station areas."

He further noted, "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, "We internally have plans to adjust the proportion in this direction."

Emphasizing a cautious approach to redevelopment, he also remarked, "In the case of redevelopment, there is the question of whether increasing the floor area ratio will help stabilize the housing market or, conversely, act as an incentive for soaring housing prices."

During today's debate, a participant suggested, "Holding taxes actually have the character of an income tax. Higher taxes are levied in proportion to the increase in housing prices, which essentially means paying capital gains taxes in advance. How about deducting the increased portion of holding taxes when levying capital gains taxes?"

President Lee responded, "It sounds like you are suggesting that we recognize the increased portion of holding taxes as a necessary expense when calculating capital gains tax. That sounds like a reasonable point," and added, "It would make paying taxes feel less unfair. It is worth considering."
 
(Photo: Yonhap News)
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