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THE INVESTOR
May 11, 2021

[Editorial] Embrace Oh policies

  • PUBLISHED :April 15, 2021 - 05:31
  • UPDATED :April 15, 2021 - 05:31
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The principal concern about the municipal administration under Seoul Mayor Oh Se-hoon of the main opposition party is the clash between his policies and those of the central government.

Particularly striking are real estate issues, which were the biggest point of contention in the April 7 Seoul and Busan mayoral by-elections.

Regarding housing supply plans, the two sides take different approaches.

The government focuses on public rental housing, while Oh seeks to activate private redevelopment and reconstruction.

The government let the Korea Land & Housing Corp. draw up and carry out redevelopment and reconstruction plans to supply more rental homes, but the public lost trust in the corporation over suspicions that LH employees used insider information to speculate on real estate. If Oh pushes his policy through and citizens respond positively, the government-driven measures, unveiled Feb. 4, will likely lose momentum.

The ruling Democratic Party of Korea is said to be toying with the idea of adjusting its real estate policies slightly in hopes of soothing popular anger after its crushing defeat in the by-elections. But there is little chance of a fundamental change.

On the day Oh was inaugurated, Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki said the framework of the country’s real estate policy must be maintained. Hong also said that neither the central government nor local governments could make such decisions unilaterally. Hong effectively vowed to put the brakes on Oh’s plan to increase the privately driven housing supply.

Another hot issue is the sharp increase in the assessed values of apartments. The government-set values serve as the base to determine property taxes and comprehensive real estate taxes.

The Land Ministry raised this year’s assessed values for apartments by a nationwide average of 19 percent, a 14-year high. The sudden rise in those figures will directly increase the burden that homeowners have to shoulder.

More serious is that heavy taxes will be imposed even on those without second homes, people who have not engaged in speculation.

The number of homeowners with only one property who paid the comprehensive real estate tax -- which is imposed on expensive homes as a sort of tax on the rich -- increased to 291,000 last year. That is more than 4.2 times what it was in 2016, the year before the Moon administration was launched.

The assessed values of apartments are determined unilaterally by the Land Ministry.

The number of complaints over the assessed values for this year is said to have nearly doubled from last year to about 70,000. A review of the complaints is underway, but it is doubtful if the roughly 520 officials can reexamine so many complaints properly.

In the Cabinet meeting Tuesday, which Oh attended for the first time since he was reelected, he said systems needed to be improved to lessen the tax burden that had increased due to the higher assessed property values. He requested cooperation from related ministers to ensure the municipal government could take part in the process of assessing the values of apartments in the capital.

The central government needs to consider Oh’s proposals positively. Given the adverse economic impact of the COVID-19 pandemic, lowering or freezing the assessed values temporarily is worth considering, too.

It is questionable whether the Seoul Metropolitan Council will cooperate actively with Oh because the ruling party dominates it.

The Democratic Party, which has 93 percent or 101 of the 110 seats in the council, issued a statement defining Oh’s past mayoralty as a failure. He served as Seoul mayor from July 2010 to August 2011. The chairman of the council wrote an unusual email to all of the employees of the Seoul Metropolitan Government, noting that the new mayor’s term in office is one year and three months. The chairman also said citizens probably want the stable management of Seoul rather than a sudden change. This sounds like a message that the city government’s public servants do not have to follow the new mayor’s instructions faithfully.

Oh seeks to change course, but if the central government, the ruling party and the city council refuse to cooperate, confusion over policy will happen. The people will suffer due to project delays and wasted tax revenue.

If the government and the ruling party have not forgotten the April 7 by-elections, which showed the public’s anger over their real estate policy failures, they should discard partisanship and embrace the new mayor’s policies from the citizens’ point of view.
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