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🇰🇷 South Korea /Economy & Trade

South Korean experts: Fair taxation requires stronger financial asset taxes

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

Analysis Named sources New plan
  • Experts at a fiscal policy forum argued that for 'fair taxation' to be achieved, financial asset taxation must be strengthened alongside property taxes.
  • They questioned the government's definition of 'fairness' and suggested considering household asset composition beyond just property.
  • Concerns were raised that shifting property tax deductions from 'holding' to 'residence' could reduce rental housing supply and negatively impact tenants.

South Korean fiscal experts are urging the government to broaden its tax reform focus beyond property to include financial assets, arguing that true "fair taxation" requires a more comprehensive approach. The call comes as the government announced tax reforms centered on increasing property taxes for ultra-high-net-worth homeowners.

We need to clarify what the standard of fairness is, how much property tax burden is considered fair, and whether the policy goal includes income and wealth redistribution or also property price stabilization.

— Shim Hye-jeongFormer tax analysis review officer at the National Assembly Budget Office, questioning the government's tax reform goals.

During a recent expert consultation on the 2026 tax reform proposals, participants debated the government's stated goal of "fair taxation." Shim Hye-jeong, former tax analysis review officer at the National Assembly Budget Office, questioned the clarity of the government's definition of fairness and its policy objectives, asking whether the aim is wealth redistribution, property price stabilization, or both.

If we only strengthen tax burdens on property ownership, rather than considering the entire household asset composition, it is difficult to achieve fair taxation from a redistribution perspective.

— Shim Hye-jeongShim Hye-jeong's argument for including financial assets in tax reform discussions.

Shim emphasized that a redistribution-focused approach necessitates considering the overall asset composition of households, not just property holdings. She pointed to the potential for wealth to shift from real estate to financial assets like stocks, and then back to property, suggesting a need for long-term discussions on tax equity between property and financial assets. Sung Myung-jae, an economics professor at Hongik University, echoed this, noting that high-net-worth individuals often hold a significant portion of their wealth in financial assets, making a focus solely on housing taxes insufficient for meaningful redistribution.

For high-net-worth individuals, the proportion of financial assets is overwhelmingly high. Taxing only housing assets heavily while not taxing financial assets at all diminishes the meaning of redistribution.

— Sung Myung-jaeHongik University economics professor Sung Myung-jae on the need to tax financial assets.

Further concerns were raised regarding the proposed shift in the long-term capital gains tax deduction for property from "holding" to "residence" status. Experts argued this change might not be fair based on tax-paying capacity, as it differentiates between profit gained through speculation versus long-term residency. There are also worries that this could reduce the supply of rental housing, as owners who do not reside in their properties might be discouraged from providing them, potentially leading to negative consequences for tenants.

It is difficult to consider it fair taxation from the perspective of tax-paying capacity, as there is no reason for differential taxation whether one earns 5 billion won through real estate speculation or by residing for more than 10 years.

— Jung Da-woonJung Da-woon, a research fellow at the Korea Institute of Public Finance, on the fairness of the proposed property tax changes.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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