Public backlash prompts government to keep comprehensive real estate holding tax unchanged, ruling party signals further revisions to property tax system

As Kim Yong-beom, the presidential chief of staff for policy, stepped down on the 1st, attention is turning to whether the government’s economic policy stance will also change. With the deputy prime minister for economic affairs, the minister of land, infrastructure and transport, and now the policy chief all replaced, and the government also announcing a partially revised tax reform plan, interest is growing in the possibility of adjustments to economic and real estate policy.
President Lee Jae-myung presided over a State Council of South Korea meeting at Cheong Wa Dae that day and approved the revised tax reform plan, while leaving room for further adjustments during the National Assembly review process. At the meeting, Lee said, "We must acknowledge that the government proposal is not always right and cannot be perfect," and added, "Please review the public’s and the National Assembly’s criticisms and alternatives in a broad-minded way, and if there are reasonable points or suggestions, reflect them in legislation without hesitation."
Cheong Wa Dae also did not rule out the possibility that the revised plan finalized by the government could be adjusted again during National Assembly deliberations. A Cheong Wa Dae official said, "Since a range of opinions have been raised regarding the real estate tax reform plan, we are reviewing its validity and necessity," adding, "We believe there will be sufficient discussion during the National Assembly process as well." The official also stressed, "While we will gather diverse public views, the government’s policy direction of normalizing real estate and prices will not waver."
At the State Council of South Korea meeting, the government approved the tax reform plan and eased some of the originally proposed measures on the Comprehensive Real Estate Holding Tax and the Productive Finance ISA, both of which had drawn controversy.
For the Comprehensive Real Estate Holding Tax, the government kept the higher basic deduction of 1.4 billion won for one-home owners who live in the property, but scrapped a plan to lower the deduction for one-home owners who do not live there to 900 million won, leaving the current 1.2 billion won threshold in place. It also reversed a plan to raise the tax burden cap to 200 percent, restoring the current 150 percent level. For the ISA, the government withdrew all of the proposed restrictions on contract periods, the ban on carrying over unused contribution limits, and the introduction of a sunset clause in 2029, deciding to keep the current system. The Productive Finance ISA will also have relaxed contract-period and carryover restrictions, and dual enrollment with Youth Future Savings will be allowed. The plan to improve the valuation method for listed stocks was not finalized this time and will be discussed further during the Regular National Assembly session.
The Democratic Party of Korea also left room for further revisions to the property tax reform plan during future discussions. Rather than immediately welcoming the government’s revised proposal, the party appears to be taking a cautious stance and first watching public sentiment, especially as real estate opinion has recently worsened in Seoul.
The Policy Committee of the Democratic Party of Korea said, "The party has consistently raised a number of supplementary proposals to prevent excessive concerns over tax burdens, including a plan not to differentiate the basic deduction for one-home owners under the Comprehensive Real Estate Holding Tax based on whether they live in the property." It added, "Going forward, we will closely examine how the government proposal affects public burdens and the housing market during National Assembly deliberations, and we will make necessary adjustments."
The party’s official position appears to reflect worsening real estate sentiment, especially in Seoul, in recent weeks. Political circles say that after the property tax reform plan was unveiled, both President Lee Jae-myung and the ruling party’s approval ratings have been shaken, weakening the government’s ability to drive policy forward. As a result, the party is expected to avoid immediately accepting the revised government proposal and instead monitor public sentiment on real estate while acknowledging the possibility of further changes during the discussion process.