This study analyzes the changes of degree in the property tax burden in Korea between 1970 and 1985.
Property tax is complementary to income tax and plays an important role in financial policy as the main source of income for local governments worldwide. It is generally accepted that property tax in Korea, as compared to other countries, is too low to perform this role properly.
Property tax bears greater tax resistance than other taxes because property tax is imposed regardless of income or expense. Also, property tax can be targeted for civil complaint without the fair property value assessment system. This is why increasing the level of property tax is not being reflected in actual policy, despite its necessity being widely acknowledged.
We examined the changes in property tax in Korea between 1970 and 1985, and came to the following conclusions: First, property taxes have increased considerably between 1970 and 1985, but are still low compared to those in other countries. Second, since effective rates of tax for property tax are determined by the property value comparison rate, the property assessment rate, the property tax rate and the property tax average rate, the property value rate is greatly dependent on the internal factors of the economy while the double property assessment rate, property tax rate and average tax rate are completely dependent on the property tax system and management methods. Third, according to the trend of the property value rate for land and buildings, the main taxation objects of Korea, land value rate decreased considerably between 1977 and 1985, and building value rate increased in terms of actual value between 1968 and 1977, but decreased in terms of economic value due to the relative drop in construction costs. Fourth, even though the highest tax rate for property tax of Korea is considerable due to the introduction and augmentation of the progressive taxation system and policy heavy taxation system, average tax rate is very low because the basic tax rate is low, and applied to the large majority of taxation objects. It played a decisive role in lowering property tax in Korea. Fifth, the existing property tax system contains a wide range of tax exemption regulations by the Local Taxes Act and special ordinance by local government, but the tax exemption rate decreased between 1978 and 1985. Finally, there is a large difference between standard market price for taxation for property tax and actual market price, and the trend of rates for price gaps are very different per period and property type.
It is necessary to increase the property tax in Korea because property tax is not adequately performing its functions due to its low rate. Therefore, policy to this end should be focused on the expansion of the role of property tax and overall property tax system. Management methods should be examined as well.
우리나라 재산세부담 분석(Analysis of property tax burden)
서울 : 한국개발연구원
|Series Title; No||정책연구시리즈 / 88-02|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KDI; KDI School|