The government is reviewing the increase of the comprehensive real estate tax (property tax) fair market value ratio from 60% to 80%.

According to reports by Seoul Economic Daily, the government is seriously considering raising the fair market value ratio of the comprehensive real estate tax from its current level of 60% to 80%. This move is said to aim to revert the property tax burden, which was reduced by the Yoon Suk-yeol administration, back to its original form. The Democratic Party of Korea has practically formalized the increase in the corporate tax's highest rate, leading to analyses suggesting that tax increase policies for expanded fiscal spending are becoming more prominent.

**Tax Increase Policies for Expanded Fiscal Spending Are Gaining Momentum**

According to the Democratic Party and the Ministry of Economy and Finance on the 18th, the government is considering a plan to raise the fair market value ratio for the property tax by 20 percentage points and is preparing specific implementation plans.

The fair market value ratio is a percentage applied to the publicly announced price when calculating the taxable standard for the property tax, and under current law, it can be set between 60% to 100%, allowing for immediate implementation through an amendment to the enforcement decree without needing to revise the law.

This ratio was raised to 95% during the Moon Jae-in administration but was lowered to 60% following the inauguration of the Yoon Suk-yeol administration in 2022, where it has remained since.

**Expectations for Increased Revenue from Property Tax Hike**

If the fair market value ratio is raised, the revenue from the property tax is expected to significantly increase. This is particularly true given the recent surge in high-priced housing, especially in the Gangnam area of Seoul, indicating potential substantial revenue effects.

The property tax revenue reached 7.27 trillion won in 2021; however, last year it significantly dropped to 4.463 trillion won.

The government is considering two options: including this ratio adjustment measure in the tax reform bill to be announced as early as the end of this month, or amending the enforcement decree before the property tax assessment standard date of June 1 next year.

A high-ranking government official explained, "It is difficult to adjust both the property tax rate and the deduction amount; thus, we are focusing on a targeted revision of the fair market value ratio."

Meanwhile, discussions about increasing the corporate tax are progressing rapidly in the National Assembly.

A key lawmaker from the Democratic Party emphasized during a press meeting on the 18th, "We must restore the indiscriminate tax cuts for the wealthy implemented by the Yoon Suk-yeol administration."

Reports suggest that the Democratic Party plans to include the corporate tax increase proposal in this tax reform bill and handle it as a supplementary budget bill during the regular session of the National Assembly.

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