[THE INVESTOR] For President Moon Jae-in, South Korea’s first progressive state chief in almost a decade, a challenging goal is to reduce economic inequality and expand state-led public welfare, without financially burdening the average taxpayer.

With key policies now under way, the president spared efforts in explaining that his set of economic democratization plans do not require an extra tax increase.

 

President Moon Jae-in speaks at a news conference at Cheong Wa Dae in Seoul on Aug. 17.

The presidential office Cheong Wa Dae on Aug. 17 held a press conference, marking Moon’s 100th day in office.

“It is absolutely crucial to stabilize real estate prices so that people may be freed from the skyrocketing housing expense burden,” the government has more powerful solutions ready in its pocket,” Moon said.

His remark came in answer to a question on whether he would introduce possession tax on real estate in order to curb speculation and market monopoly.

“The government has announced unprecedentedly strong real estate measures, which I believe are powerful enough to suppress the prices,” he said.

“But should the real estate prices go up once again, despite (all these measures), the government has stronger alternatives ready in its pocket.”

Though he thereby seemed to allude at a possible tax hike upon multiple home owners or affluent taxpayers, Moon added that a tax increase plan was currently not under consideration.

“(A possession tax on real estate) may be an option for the government to consider, should there be a social consensus on the idea, but at the current state, it is not part of the real estate stabilization plan,” Moon said.

On Aug. 2, the Moon administration presented a set of restrictions on real estate transactions, mostly tightening mortgage loan qualifications for house buyers and limiting speculative transactions.

Concerns were raised, however, that a possession tax is needed in order to induce multiple owners to sell.

Moon also denied plans to increase the nation’s tax in general, claiming that the welfare plans set forth so far do not require extra taxation.

“The government has already pledged to increase tax on corporates and the top economic cluster, which should be sufficient to back the incoming welfare programs,” he said, adding that the government’s financing roadmap is not just a “Santa Claus” idea.

Though the state chief refrained from immediate calls for a tax hike, he largely left room for such possibilities -- a tone which is likely to trigger conflicts with the largely conservative opposition.

The main opposition Liberty Korea Party, having recently decided to lower tobacco prices and cut down oil tax, is set to stand against any scenario of a tax hike that is aimed at financing Moon’s welfare plans. The National Assembly is slated for a provisional session, starting from Aug. 18.

By Bae Hyun-jung/The Korea Herald (tellme@heraldcorp.com)