Adjusting Property Taxes Amid Economic Boom Requires Addressing Polarization

Kim Yong-beom, a senior presidential secretary for economic policy, has called for the normalization of real estate taxation, advocating for reasonable adjustments to both holding and transfer taxes. This stance aligns with President Lee Jae-myung's earlier remarks about South Korea's relatively low property taxes. The government appears poised to increase property holding taxes and reduce capital gains tax benefits for non-resident, single-home owners.

These proposed tax adjustments are partly a reaction to the current economic surge, driven significantly by the booming semiconductor sector. Record profits from companies like Samsung Electronics and SK Hynix are boosting GDP growth and foreign exchange reserves. However, this economic windfall also carries risks. A significant portion of the profits, from executive bonuses to stock market gains, could flow back into the real estate market, potentially reigniting property price inflation in Seoul and surrounding areas, which Kim's tax proposals aim to preempt.

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Real estate taxation must be normalized. Reasonably adjusting holding and transfer taxes is necessary and the right direction.

Beyond managing potential real estate speculation, a more pressing concern is the widening economic polarization. While semiconductor industry employees and successful investors celebrate the boom, many small business owners face bankruptcy, small and medium-sized enterprises struggle with declining profits, and young people find it difficult to secure jobs. Kim himself acknowledged this disparity, noting that widespread feelings of economic hardship amidst national prosperity can turn economic issues into political ones.

Therefore, the government is urged to devise exceptional measures to mitigate this growing divide. These solutions should be reflected in upcoming policy announcements, including the tax reform plan and the national budget for the following year. Addressing both the real estate market and the socio-economic disparities is crucial for sustainable and equitable economic development.

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If the question 'Why am I struggling so much when the economy is good?' begins to accumulate in various parts of society, economic problems become political problems.