"Tax Normalization" Aimed With Revision Plan... Will It Stabilize Housing Prices?

[Anchor]

Let's talk in detail with economic news reporter Jeong Seong-jin.

Q. Will it stabilize housing prices?

[Reporter Jeong Seong-jin : First, there is something the government repeatedly emphasized while releasing the tax revision plan. It is that the plan was not introduced as a housing price stabilization or real estate measure, but rather with the goal of tax normalization. The government explains that, as a byproduct, properties held by owners of multiple homes or leasing businesses could come onto the market, having some impact on stabilizing housing prices. Because the tax rate increase becomes steeper every time the comprehensive real estate holding tax (Jeongbu-se) tax base bracket goes up, it is true that the burden has increased for what the government has previously referred to as "one prized home" and the top 0.4% ultra-high-priced homes. However, it remains uncertain whether the hike is large enough to induce actual sales. Since residing in the home is advantageous, the power to hold out may actually grow stronger, and while capital gains tax surcharges for multiple homeowners were eased, some respond that multiple homeowners who were going to sell before the surcharge went into effect already sold in the first half of this year. Last time, the OECD recommended in a report to increase holding taxes and lower transaction taxes, but critics also point out a limitation in that only the holding tax for ultra-high-priced homes was partially increased, while revisions to transaction taxes such as acquisition and registration taxes were omitted. With demand continuing to be suppressed, we will likely need to see how the additional supply measures being prepared by the Ministry of Land, Infrastructure and Transport and the loan complementary measures for youth and supply sectors being prepared by financial authorities turn out.]

Q. Preventing "stock price suppression"?

[Reporter Jeong Seong-jin : That is correct. To address criticism over the trick of "stock price suppression," where controlling shareholders intentionally lower stock prices to reduce inheritance and gift taxes, the government has established two criteria. First, it presented cases where a company's PBR, or price-to-book ratio, falls among the bottom tier by industry, or where market-valued assets drop by 30% or more due to activities negative to corporate value such as dual listings, as criteria for "stock price suppression." If evaluated as such a "stock price suppression" company, its stock value will be increased by at least 30% or more for taxation. Requirements for the family business inheritance deduction, which has been pointed out as a means of expedient inheritance, have also been drastically strengthened. Family businesses are defined by specialized skills and management know-how, excluding parking lots, hospitals, and pharmacies from deduction eligibility, with only 727 industries set to qualify. Support measures for the youth class were also prepared, such as expanding the youth monthly rent tax credit rate to 17% and introducing a youth-type Individual Comprehensive Asset Management Account (ISA) to apply a 10% income deduction on deposits. This revision plan will undergo legislative notice starting tomorrow, August 4, through August 20, pass through the Cabinet meeting on the first day of next month, and is scheduled to be submitted to the National Assembly.]
※ Please note: This article was translated by AI and may contain errors.