|
The government will reform the embattled comprehensive real estate tax, whereby heavy duties have been levied on homes worth more than W600 million since 2005 (US$1=W1,143). Senior government officials on Monday discussed the tax reform program with leaders of the ruling Grand National Party at headquarters in Yeouido, Seoul with a view to drastically lightening taxpayers' burdens. They are expected to reach a final decision on this program and make an announcement Tuesday. But the ruling party failed to reach consensus over the tax reform plan. On Tuesday, the GNP will hold a caucus to reach agreement.
The government wants to apply new rates to payments beginning 2009. The reform plan also envisages raising the taxable house price from W600 million to more than W900 million. The current rates for the comprehensive property tax, 1-3 percent, will be reduced to 0.5-1 percent.
Under the current system, different rates are applied to different amounts of home prices that exceed the baseline W600 million - 1 percent for an excess of less than W300 million; 1.5 percent for an excess between W300 million and W1.4 billion; 2 percent for an excess between W1.4 billion and W9.4 billion; and 3 percent for an excess of more than W9.4 billion. But the government plans to lower the rates to 0.5 percent for less than W600 million; 0.75 percent for between W600 million and W1.2 billion; and 1 percent for more than W1.2 billion.
If the new rates are applied, the amount will be reduced by more than 90 percent. Tax for a home worth W1 billion will decrease from W3.54 million this year to W180,000 next year; and for a W1.2 billion-worth from W6.12 million to W540,000.
The government will also reduce taxes for the elderly who have only one home by 10 percent for those aged 60-65, 20 percent for those aged 65-70, and 30 percent for those 70 years old or older. It also decided not to levy the tax on the business-use property.
If the taxable house price rises to more than W900 million from the current W600 million, the number of households subject to the comprehensive property tax will decrease by about 64 percent from 286,000 this year to 103,000. Some 183,000 households will be exempt. The ratio of homes subject to this kind of tax across the country will also fall from 2.1 percent to 0.76 percent.
(englishnews@chosun.com )
|
