Democratic Party to refine real estate tax plan amid election concerns

The Democratic Party on August 4 assessed the government's real estate tax reform plan, announced the previous day, as a "fair and rational process to protect actual demand and correct distorted structures." However, the party is closely monitoring public opinion, with some lawmakers in Seoul expressing concerns about potential negative impacts on the 2028 general election.

Han Byung-do, the acting leader and floor leader of the Democratic Party, stated at a party meeting that the tax reform's goal is "tax normalization for growth and livelihoods." He added, "We will meticulously refine the proposal during the National Assembly review process, strengthening necessary support and addressing areas for improvement." This indicates the party's intention to support the government's plan while also conducting a thorough review.

Within the ruling party, many believe the tax reform bill "largely aligns" with their goals. They argue that the plan precisely targets excessive tax burdens on ultra-high-priced or non-resident property owners, while offering relief or minimal increases for most single-homeowners and actual residents.

Despite this general support, some Seoul-based lawmakers are worried. One senior lawmaker noted that the government seems to have "put a lot of thought into balancing tax normalization and support for actual residents." Another first-term lawmaker from Seoul suggested that the impact on the market and public opinion would be limited, as the number of comprehensive real estate holding tax (종부세) payers would not significantly increase, nor would the tax burden for most existing payers rise substantially.

However, a prevailing concern among Seoul lawmakers is that the strengthened comprehensive real estate holding tax measures could negatively affect the 2028 general election or a potential Seoul mayoral by-election, which could occur as early as April next year if Mayor Oh Se-hoon faces disqualification. One senior lawmaker worried that the increase in the tax burden cap from 150% to 200% could be "misinterpreted later as the Lee Jae-myung government doubling the comprehensive real estate holding tax," potentially creating difficulties in the upcoming mayoral election.

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The tax reform's goal is tax normalization for growth and livelihoods. We will meticulously refine the proposal during the National Assembly review process, strengthening necessary support and addressing areas for improvement.