Korea's Real Estate Tax Doubles over Last Decade

  • By Shin Eun-jin

    December 21, 2021 10:09

    The ratio of Korea's property tax to GDP has nearly doubled over the last decade and risen exponentially as the Moon Jae-in administration struggled to curb skyrocketing home prices.

    In a report on Monday, the Korea Economic Research Institute said the ratio of Korea's real estate tax to GDP is expected to jump from 0.78 percent in 2017, when the current administration was inaugurated, to 1.22 percent in 2021.

    "This is higher than the OECD average of 1.07 percent," KERI said, "and nearly double the 0.7 percent of 2010."

    The institute called for a reduction of real estate-related taxes, which are levied on buying and selling properties, to stabilize the property market.

    Korea's ratio of all property-related taxes to GDP was already 3.66 percent in 2018, about 2.2 times as high as the OECD average.

    "We cannot ignore the fact that foreign countries that imposed wealth taxes have abolished them due to the side effects such as brain drain and capital flight," said Lim Dong-won at KERI. "To stabilize the real estate market, policies should remain consistent along with enough supply of new homes to meet demand, instead of simply increasing tax burdens or tightening regulations."

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