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News analysis
Avoid the secondary effects of the fall in the effective tax rate
Even if the house price goes up, I’ll pay less taxes
Tax is a problem that the National Assembly will solve by adjusting the tax rate
President Moon Jae-in will deliver a corrective address on the 2021 budget in the main assembly hall of the National Assembly on the morning of the 28th. Blue House photo reporters
While the government has proposed a plan to increase the listing rate of quoted prices to 90% by 2030, arguments like the realization of quoted prices are actually increasing ‘and’ fiscal bombs’ are being raised around the party of opposition. In response to this, criticism has emerged as to whether it will go back in time, which had side effects such as a drop in the effective tenure tax rate and a deterioration in tax equity due to the published price being significantly lower than the price. market price. There are also voices that the National Assembly should address the problem of the increase in the tax burden that accompanies the process of realizing the quoted price, if necessary, by reviewing the tax law.
■ Popular Power “Limit the increase in public prices”
The power of the people made a comment on the ‘plan for the realization of the real estate public price’, which was announced the day before on the 28th, and criticized it saying: “The intention is to raise the official price and cause a substantial tax increase” . It also established a policy to establish a legal mechanism to control the breadth of the increase in public announcement. Song Seok-joon, chairman of the Real Estate Market Standardization Special Committee, said: “It is considered a violation of the tax legal principle that the publicly announced land price rises rapidly and is overloaded by more people than the actual increase in the tax rate”. “The Real Estate Disclosure Law, etc. We will promote the revision of related laws even ”, he said. Representative Gyeong-jun Yoo proposed an amendment to the ‘Real Estate Price Disclosure Law’ (Real Estate Disclosure Law) in June, which limits the range of publicly announced price increases to 5%. Even if the market price jumps by 10%, you will reduce the burden on the tenure tax by adjusting the increase in the quoted price to 5%. It has long been criticized that the listing price, which is lower than the market price, lowers the effective holding tax rate and hurts fiscal equity. As of 2019, the realization rate for houses under 300 million won was 68.6%, while the realization rate for houses in the range of 900 million to 1.5 billion won was 66. %. The ruling and opposition parties agreed that such an issue should be resolved, and the ‘Real Estate Disclosure Law’ was approved by the National Assembly in April. The law enacting the purpose of enacting ‘to promote fair prices for real estate and promote equity in various taxes and fees’ in Article 1 regulates the published price as’ the price that is considered to be most likely to be established when normal transactions take place in a normal market. ‘ However, it is actually a “market price”. The American Association of International Tax Assessors (IAAO) believes that when the published price is between 90 and 110% of the actual transaction price, the taxes are correctly reflected in the market price ( ‘Real Estate Property Tax Reform and Policy Implementation of Tax Regulations’, Sang-soo Park, Researcher, Korea Local Tax Research Institute)). According to the Korea Land Research Institute, the completion rate in Denver in the United States is 101.3%, Ontario in Canada is 100%, and in Australia (Australia) it is 90-100%. On the other hand, as of 2020, Korea’s published price completion rate (published price compared to actual transaction price) is only 65.5% for land, 53.6% for single-family homes. and 69.0% for apartment houses. The effective rate of Korean property tax is 0.167% (as of 2017), which is less than half of the 0.396% average of the Organization for Economic Cooperation and Development (OECD), which is attributed to the published price of ‘Scarecrow’, which does not adequately reflect the market price. Choi Eun-young, director of the Korea Urban Research Institute, said: “Only when there is an official price that accurately reflects the actual price of the transaction, can it be said that tax legalism can be performed in which detailed charges they are accurately displayed according to the tax rate established by the National Assembly. ”
■ “Acknowledge by linking property prices and itemized charges”
For this reason, a social consensus has been reached on the need to “carry out the published price” to minimize the gap between the published price and the market price. In May 2014, during the Park Geun-hye administration, the Ministry of Land, Infrastructure and Transport announced a plan to improve the disclosed prices, stating that “ starting in 2016, a real estate price disclosure system based on in the real prices of real estate transactions. ” However, faced with the “increased tax” framework, I was getting frustrated every time, and only in 2019 did the actual transaction price begin to be reflected in the published price calculation. Park Yong-dae, director of the Center for Solidarity Participation in Tax and Financial Reform (lawyer), said: “While we take for granted that the tax burden is as low as the increase in earned income, we do not recognize it in the sector. real estate “. It is necessary to make recognition possible by linking with the details ”. It is pointed out that if a social consensus is reached on the excessive tax burden, the National Assembly should politically release the official price, which is the administrative price, and not artificially. A typical example is Taiwan, which has targeted 90% of the quoted price realization rate since 2005 and reached 90.7% in 2017. Hyung-chan Lee, a researcher at the Institute of Land, Infrastructure and Transportation, who was in charge of the ‘Proposed Real Estate List Price Realization Plan’, he said: “In Taiwan, there was a natural process of tax rate adjustment in the published price realization process.” “The official price reflects the market price, and the tax problem is different.” You have to solve it to create a system. ”
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■ Housing benefits of 900 million won or more at low public prices
Although “increased taxes” and “tax pump theory” are discussed, realizing the published price will result in a home with a significant tax increase at this time, and is expected to become an expensive home. Looking at the estimated tax calculated by the Ministry of Land, Infrastructure and Transportation, the market price of 200 million won in home ownership is 30,000 won (190,000 won → 220,000 won) compared to this year in 2023, 540,000 won (13.2 million won → 1.86 million won), 2.1 billion won (737). 10,000 won → 13.4 million won) increase. In particular, there are an estimated 350,000 homes with a market price of 900 million won or more, which are expected to have benefited from the easing of the tax burden at a public price below the market price. According to national apartment price data released by the Ministry of Land, Infrastructure and Transportation in April, the number of houses with a market price of 900 million won or more was 66.3383 units nationwide, 4.8% of the total homes (13829981 units), but according to the published price, 300,0009642 units, 2.3%. Stopped at. It is also a problem that the gap between market prices and published prices widens as house prices rise sharply. By comparing the actual transaction price with the published price of Eunma Apartments in Daechi-dong, Gangnam-gu since 2006, when the official house price system was introduced, the published price in 2016, which was established after Eunma apartment exceeded 1 billion KRW (December 2015), it is 6 It was 9.9 billion won, and the price published in 2020 was 1.392 million won after exceeding 2 billion won (December 2019) . When the market price was 1 billion won, it was around 300 million won, but this year this difference doubled to 600 million won. The completion rate is in a stable position of 67.9% to 67.6%. Professor Park Joon of the University of Seoul (Graduate School of International Urban Sciences) said, “The realization of the official price can be seen as a tax-oriented way to adequately pay the part that has been paid less so far.” Therefore, it should be a principle to accurately reflect the market price regardless of the itemized invoice. “By Jin Myung-sun and Kim Mina, Staff Reporter [email protected]
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