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Residents of an 181.5 sq.m unit in Mokryun Shindongah Apartments in Pyongchon, Gyeonggi Province must pay W1.75 million in comprehensive real estate taxes (US$1=W925). Last year, they paid just W266,000. The declared value of each of the apartments was W648 million last year but rose 35 percent this year to W872 million. But comprehensive real estate taxes have jumped more than six times over the same period. Residents of LG Xi apartments (194.7 sq.m) in Shinbong Maeul, Yongin city received comprehensive real estate tax notices for a cool W767,000, more than six times higher than the W116,000 they paid last year. The declared value rose just 15 percent over the period, from W619 million in early 2006 to W712 million early this year.
The apartments saw their value rise 35 percent and 15 percent, but the amount of taxes levied on them rose 560 percent. Which country in the world has such taxes? Such tax notices would be unthinkable unless the government regards the public as a joke. Yet a total of 379,000 Koreans have been slapped with this huge tax bill, again 60 percent more than the 277,000 who got such notices last year. The total amount of taxes these people must pay has surged from W455.2 billion last year to W1.24 trillion this year.
Some 39 percent of the people slapped with the huge bill or 147,000 own just one house. They didn’t engage in real estate speculation and they didn’t suddenly strike it rich. To them, the tax notices must be a source of fear and anxiety. And many of these people saw the prices of their apartments stagnate or even drop after the government announced their declared values early this year. The market value of Eunma Apartments (102.5 sq.m) in Daechidong, for example, has remained similar to the end of last year, but residents there must pay W1.67 million in comprehensive real estate taxes this year. Last year, they did not have to pay any; they do now because the declared value jumped from W576 million early last year to W832 million early this year. In Gyeonggi Province, there are more than 4,500 households that must pay the comprehensive real estate tax even though the prices of their apartments have fallen below the limit (W600 million declared value, W750 million market value).
This year, comprehensive real estate taxes were imposed on 80 percent of the house prices after a W600 million deduction, but next year that will rise to 90 percent. The president’s threat to the public, that taxes will become enormous, is becoming a reality. Taxes so heavy that taxpayers must either take out a loan or sell their homes to pay them are not taxes, they are punitive fines.
In reality, the comprehensive real estate tax was created by the Roh Moo-hyun administration to take revenge on the so-called “haves” in this society. The former national policy secretary to the president Lee Jung-woo, who came to Seoul from Daegu, complained that apartment prices in the southeastern city were cheaper than apartment leases in the capital. This administration is leaving the public with a final gift: a huge bill for what should really be called a comprehensive vengeance tax.
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