Reform Party floor leader Cheon Ha-ram speaks at a supreme council meeting at the National Assembly on Monday. At left is party leader Lee Jun-seok. [Yonhap]
Reform Party floor leader Cheon Ha-ram speaks at a supreme council meeting at the National Assembly on Monday. At left is party leader Lee Jun-seok. [Yonhap]

The Reform Party strongly criticized the government's 2026 tax reform plan, announced Monday, calling taxation "a last resort."

Reform Party spokesperson Cha Ho said in a statement Tuesday that the plan amounted to "a simple tax hike," asking, "Where did the promise not to use taxes to control housing prices go?"

On the controversy over raising property holding taxes, Cha said President Lee Jae Myung had described such a move as "a last resort" in January and "a nuclear bomb in terms of war" in March. "Calling something a last resort means there are other tools to use first," Cha said.

Cha said those other tools had not been used. "Apartment building permits in Seoul in June were one-third of what they were a year ago, and apartment completions in Seoul in the first half of the year fell to 58.4 percent of the prior-year level," Cha said. "Supply has not increased, and lending regulations on end-users remain unchanged."

Cha also argued that if the government was citing international standards to justify raising property taxes, it should cut transaction taxes by an equivalent amount. "What the OECD recommended was a revenue-neutral shift — reducing the share of transaction taxes and increasing the share of property taxes," Cha said. "That means cutting acquisition taxes and capital gains taxes by as much as property taxes are raised."

Cha added that South Korea's real estate tax burden already stands at 3.0 percent of GDP, double the OECD average of 1.6 percent. "The problem is not the total amount but the structure — the OECD's diagnosis is that transaction taxes account for more than half, at 50.4 percent," Cha said.

Cha warned that raising property taxes without cutting transaction taxes would hurt renters before homeowners. "Whether landlords sell, move in themselves, or simply pay the tax, the end result is fewer jeonse units and higher monthly rents," Cha said.

Cha said that if landlords chose to sell, they would need to do so within two years, yet buyers still face heavy acquisition tax surcharges. "The exit door has been opened, but if the entry door is locked, transactions won't increase — listings will just pile up," Cha said. If landlords chose to move in themselves, Cha noted, a change replacing the long-term holding deduction with a long-term residency income deduction would push owners to evict tenants and occupy their own homes, removing those units from the jeonse market.

On the tax burden itself, Cha said the comprehensive real estate tax on a non-resident single home valued at 2 billion won ($1.4 million) would quadruple next year. "The extra tax will be passed on as monthly rent," Cha said.

Cha also directed criticism at the Democratic Party of Korea, saying the issue was "not one to let slide in silence." "It is the National Assembly, not the government, that votes on legislation. If the ruling party, which holds an overwhelming majority of seats, passes this bill, the Democratic Party will bear responsibility for the outcome — fewer jeonse units and higher monthly rents," Cha said.

"If property taxes are to go up, transaction taxes must come down," Cha added. "The current regulations are blocking not speculators but people without homes from buying their first property."


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