Ruling party remains split on property tax cut ahead of final decision

(ATTN: REPHRASES para 5, 11 for clarity; ADDS first-term ruling party lawmakers'
move in paras 9, 10)
By Shin Hae-in
SEOUL, Sept. 25 (Yonhap) -- Skepticism over a government-led plan to ease the tax
burden on high-end homeowners continued to escalate Thursday, with President Lee
Myung-bak's own party struggling to reach a consensus amid a wide opinion gap
among members.
The issue of raising the threshold for the so-called comprehensive real estate
tax by up to US$300,000 has become the latest bone of contention here, with
critics accusing the conservative president of siding with the rich.
By raising the tax bar from homes valued at 600 million won to those priced at
900 million won ($780,000) apiece, nearly 200,000 households, mostly in the
country's affluent southern Seoul districts, will be exempted from the revised
law. The current taxes on high-value real estate holdings are paid in addition to
regular property taxes.
The ruling Grand National Party (GNP) appears hesitant to throw its support
behind the president, aware of its image as a party of the wealthy and with many
of its own members possessing homes in the more well-off region.
"We are not saying the government is wrong," GNP whip Hong Joon-pyo, the party's
most outspoken skeptic of the plan, told a radio interview Thursday. "But we
cannot bypass the irritation the general public must feel. We must be more
considerate."
Hong was supportive of earlier reports suggesting his party may request keeping
the 600 million won threshold, saying, "Some government proposals pass the
parliament only after adjustments are made."
The plan will be submitted to the parliament for approval after a Cabinet vote on
Oct. 2.
In an anonymous poll of all 172 ruling party members Thursday morning, just ahead
of a final decision expected Friday, at least one third of the lawmakers are said
to have opposed the plan as it stands.
Twelve first-term ruling party lawmakers issued a statement Thursday, expressing
opposition to adjusting the tax system.
"We cannot support a plan that the majority of the public disapproves of," the
statement said. "Now is more a time to come up with measures for other urgent
economic issues."
Disapproval by opposition legislators who occupy the remaining seats in the
299-member unicameral house is stronger.
"The public can count on our word. The government plan for the country's most
privileged one percent will never get our approval," Won Hye-young, floor leader
of the main opposition Democratic Party, said Thursday.
President Lee, a former CEO and one of the wealthiest men in the country, stands
firm but appears disappointed by his party's lack of support.
"The purpose of the plan is not to lower the burden for the wealthy but to
rectify the errant taxation system," he said in a meeting with his aides
Wednesday.
First introduced in 2005 under the former Roh Moo-hyun administration, which
placed importance on the distribution of wealth, the real estate tax is paid in
tandem with regular property tax.
Calling it a "punitive measure" against the rich, many people with high-value
real estate holdings have been fighting against the current tax system. In 2006,
80 Seoul residents filed a constitutional petition to repeal the regulation. The
top court has yet to rule on the case.
"It is a fact that the current taxation system is wrong," an unnamed ruling party
legislator said. "And it is a shame that this is turning into a war between the
haves and the have-nots."
The latest move reflects the government's economic policy of boosting consumer
spending and revitalizing the housing and construction markets, which account for
about 18 percent of the country's gross domestic product.
Earlier this month, the government announced far-reaching tax reforms which
included income and corporate tax cuts anticipated to save people an estimated
11.7 trillion won by the end of next year.