South Korea's Housing Tax Ratio Lags Behind Other Advanced Nations

Strategic Insights -

South Korea's reliance on low levels of housing taxes has resulted in a significantly lower ratio of home taxes to total tax revenue compared to other advanced nations in 2003. According to the Bank of Korea, the ratio stood at 9.6 per cent in 2003, far below the 13.9 per cent in Japan, 11.3 per cent in the United States, and 10.7 per cent in England. The low ratio of housing taxes to gross domestic product (GDP) was also notable, with South Korea recording 2.4 per cent, compared to England's 3.8 per cent and the U.S.'s 2.9 per cent. The assessment highlights the government's focus on transaction taxes, with the ratio of transaction tax to total tax income reaching 7.3 per cent, significantly higher than the U.S. and Japan.

Key Takeaways:

  • The ratio of home taxes to total tax revenue in South Korea was 9.6 per cent in 2003, lower than Japan (13.9 per cent), the United States (11.3 per cent), and England (10.7 per cent).
  • The ratio of total housing tax revenue to gross domestic product (GDP) in South Korea was 2.4 per cent, lower than England (3.8 per cent) and the U.S. (2.9 per cent), but higher than Japan (2.2 per cent).
  • Housing taxes in South Korea are composed of ownership, transaction, and capital gains taxes.
  • The government unveiled a set of tax-raising measures in August 2003 to curb housing prices, including ratcheting up taxes on multiple homeowners and slashing transaction taxes by 1 percentage point to 2.5 per cent.
  • The ratio of transaction tax to total tax income in South Korea was 7.3 per cent, compared to 0.2 per cent in the U.S. and 0.7 per cent in Japan.
  • The ratio of property tax to total revenue in South Korea was 2.2 per cent, compared to 11.1 per cent in the U.S. and 13.2 per cent in Japan.
  • The ratio of transaction tax to total gross domestic product in South Korea was 1.9 per cent, compared to 0.1 per cent in the U.S. and 0.1 per cent in Japan.

Statistics:

  • Ratio of home taxes to total tax revenue in South Korea: 9.6 per cent (2003)
  • Ratio of total housing tax revenue to gross domestic product (GDP) in South Korea: 2.4 per cent (2003)
  • Ratio of transaction tax to total tax income in South Korea: 7.3 per cent (2003)
  • Ratio of property tax to total revenue in South Korea: 2.2 per cent (2003)
  • Ratio of transaction tax to total gross domestic product in South Korea: 1.9 per cent (2003)

Sources:

  • Bank of Korea (BOK)
  • Yonhap (September 14, 2003)