President Lee Jae Myung has ordered officials to craft steps that would make it “impossible” for multiple-home owners to hold out as the government moves to end their tax breaks.
Lee raised the stakes at a Cabinet meeting at Cheong Wa Dae on Tuesday, echoing the hard-line tone he has recently struck on his official X account ahead of the June 3 local elections.
Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol briefed the Cabinet on plans to reinstate heavier capital gains taxes on multi-homeowners in principle as of May 10 this year. The tax levies have been suspended and extended on an annual basis since the Yoon Suk Yeol administration took office on May 10, 2022.
"This is maybe the last chance to avoid heavier taxation," Koo said during the meeting. "I hope the public will maybe use this opportunity so that they do not end up being subject to the heavier tax."
Lee then immediately seized on the wording, saying, "During your remarks, you used the word ‘maybe’ twice." Lee underscored, "There is no ‘maybe.’ There is no ‘maybe.'"
“The real estate problem in the Republic of Korea has become a cancer-like issue that is holding back society,” Lee said, referring to South Korea by its official name.
Lee underscored the urgency of ending the tax waivers, warning that “if we don’t do it this time, we could be looking at a lost 20 years.”
“We have to stop it even now to minimize the damage,” Lee said. “We need policies that make holding out a loss. ... We have to create an objective belief that following the rules now is, in realistic terms, a benefit.”
Lee ordered authorities to “pursue every possible measure” to ensure multi-homeowners cannot simply hold out against the government’s housing policy.
“And there is also this kind of thing. If it is made so that one can hold out, then there can be cases like, ‘let’s wait for a regime change someday.’ That can actually happen. But we have to make that impossible,” Lee told Cabinet members.
Lee notably warned that failure on housing policy would sap the administration’s momentum, saying it would make it difficult to govern “for the remaining four years and several months.”
“Therefore, please prepare to design the system perfectly, rationally and fairly, and implement it.”
Lee reiterated that the government lacks neither the authority nor the institutional tools to put such a system in place.
"What remains is simply a question of whether we choose to act or not — we are fully capable of doing it. The only thing left, then, is a matter of political judgment."
The Lee administration has decided to end the temporary suspension of higher capital gains tax rates for multi-homeowners on May 9.
However, Koo suggested allowing an extra three to six months for buyers to finish final payments on transactions where purchase contracts are signed by May 9.
The grace period would vary by region. In Seoul, the extension would be limited to three months for the Gangnam, Seocho and Songpa districts, as well as Yongsan. For newly designated regulated areas announced on Oct. 15, the extension could be up to six months.
dagyumji@heraldcorp.com
