Opposition Slams Real Estate Tax Reform: "Tax Bomb to Trigger Rental Crisis"

People Power Party Criticizes Government's Real Estate Tax Reform Plan

"Stricter Residency Requirements Will Reduce Rental Supply"

"Increased Tax Burden Will Be Shifted to Tenants"

The opposition parties have launched an attack over the government's proposed real estate tax reform, claiming that it will sharply drive up monthly and yearly rental prices by decreasing the supply of rental homes and passing on the tax burden to tenants. They argue that strengthening both property holding taxes and capital gains taxes simultaneously will cause properties to be locked off the market and lead to a collapse in transactions, ultimately increasing the housing costs for ordinary people and those without homes.

On August 4, Bae Joon-young, secretary for the People Power Party (PPP) at the National Assembly’s Planning and Finance Committee, told The Asia Business Daily in a phone interview, "If the residency requirements within the real estate tax scheme are tightened, landlords will try to move into their properties themselves, inevitably forcing existing tenants out.” He argued, “This will be a significant short-term negative factor for rental housing supply.”

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Assemblyman Bae further warned, "Since tax benefits for multiple-homeowners and rental business operators have been abolished and regulations tightened, the supply of rental housing will be reduced even further. This could result in situations where, over the next few years, tenants are forced out of the homes they have been living in."

He added regarding the current tax reform plan, "Other than giving supporters catharsis by cracking down on expensive homes, I see no clear direction. I have heard there is significant embarrassment and concern even among Democratic Party members representing metropolitan districts."

Jeong Jeom-sik, floor leader of the PPP, also raised the level of criticism by calling the plan the "government's declaration of a tax bomb." He stated, "Raising the comprehensive real estate tax and capital gains tax on high-priced homes and non-owner-occupied single properties is effectively a punitive tax increase. The added tax will ultimately be passed on to tenants, pushing up rental prices and worsening the financial burden for ordinary citizens."

Prominent PPP member Na Kyung-won expressed similar concerns. She said, "Punitive taxes inevitably trigger a backlash from the market. Soaring property holding taxes will be shifted to tenants, further squeezing ordinary people's housing costs."

She went on to criticize, "Harsh capital gains taxes will lock up properties and bring about a transaction freeze. The Moon Jae-in administration tried to control housing prices through taxation, dividing people into 'haves and have-nots,' and the Lee Jae-myung administration and Democratic Party are now repeating this real estate disaster."

The opposition also questioned the government’s push for additional tax increases in a situation where tax revenue is already rising due to the semiconductor boom. The government estimates that the tax reform measures would increase tax revenue by 3.4 trillion won over the next five years, with about 63 percent, or 2.1 trillion won, coming from increased comprehensive real estate taxes.

Assemblyman Bae criticized, "Despite overflowing tax revenues from the semiconductor boom, the government has chosen a tax-raising approach. While the government has more money to spend, the public is left with little to spend due to high interest rates and inflation. Yet the government has drastically reduced tax benefits directly impacting livelihoods."

Assemblywoman Na also commented, "Even with record high excess tax receipts from the semiconductor boom, the government is planning to pile an additional 3.4 trillion won tax burden on people over five years. This isn’t tax reform—it’s a flat-out declaration of tax hikes."

This content was produced with the assistance of AI translation services.