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(EDITORIAL from Korea Times on July 28)

Editorials from Korean Dailies 07:10 July 28, 2020

Growing discontent
Punitive taxes cannot solve housing speculation

It should be noted that protestors against strong punitive housing taxes have gathered for the third consecutive week now. On Sunday, slightly more than 1,000 gathered in downtown Seoul to loudly object to what they see as unfairly strong mortgage tightening and higher property and capital gains taxes.

The protest comes in the wake of the government's strong measures ― dubbed by some as the "June 17," and "July 10" measures. The former tightens mortgage rules in much of Seoul and its surrounding area while the latter entails levying higher punitive taxes for owners of two or more houses, all with an aim of curbing speculative increases in housing prices.

Then on Monday, civic groups took more definitive action by filing a complaint with the Constitutional Court against the government's measures as infringing on people's property rights.

The fast pace of these government measures has touched off confusion and anger, not to mention soaring housing prices. In addition, the government and ruling party's move to revise three related laws on leasing and renting, including a 5 percent cap on rent increases, have hiked up deposits for rental homes. This because landlords, who claim that extending the right to renew contracts to existing tenants smacks of retroactive application, are asking for higher deposit sums before the lease-related revision takes effect.

There is also discontent about the simultaneously increasing both the property and capital gains taxes.

The slogans that the protestors held up Sunday quintessentially summed up their sentiment: "They are not taxes but fines," and "Landlords too are citizens of Korea." And that sentiment has led to the suit filed with the Constitutional Court.

The government should face the reality that its 22nd round of measures has produced side-effects of further heating up the real estate market amid concerns about the increased tax burden.

The government is soon expected to announce its plan to increase the housing supply. Alternatives reportedly under discussion are partially lifting restrictions governing the reconstruction of dilapidated apartments. The public's ill-confidence in the administration is already causing skepticism about its forthcoming plan however.

Another idea the administration has rushed to revisit is relocating, or rather completing the relocation, of the administrative capital to Sejong, in a bid to rein in housing prices while promoting balanced national development to reduce the population and business concentration in Seoul.

But a recent Realmeter survey showed that 54.5 percent of respondents do not see how this will stabilize housing prices.

Housing is a complex issue. What the administration has done to date has only brought about unexpected developments, which it should address through public hearings and debates rather than a unilateral push to rein in speculation punitively.
(END)

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