YONHAP NEWS

(News Focus) Lee's bid to slash tax for the rich estranges ordinary people

   By Yoo Cheong-mo
SEOUL, Sept. 24 (Yonhap) -- The alleged "pro-rich" policies by the administration of President Lee Myung-bak are again in the headlines, with an overwhelming majority of netizens venting resentment at a controversial government bid to gradually scrap special property taxes for owners of expensive homes.

   Refusing to heed public criticism that the proposed tax cuts are preferential to the wealthy, Lee on Wednesday declared that his government is strongly determined to push through the revision of the comprehensive property taxation system.

   Lee explained that the government proposal, which would abolish the hefty comprehensive property tax for owners of homes valued over 600 million won (US$522,000) each and steeply lower the special tax on homes priced above 900 million won per unit, is primarily intended to rectify the problematic taxation system.

   "The genuine purpose for the planned property tax cuts for owners of expensive homes is not to lower tax burdens for the wealthy, but to correct a wrongful taxation system," Lee was quoted as saying by presidential spokesman Lee Dong-kwan.

   But the president didn't elaborate on the problems with the special comprehensive property taxes legislated by Lee's predecessor, Roh Moo-hyun, in 2006 to help stabilize the local real estate market.

   Currently, the owner of a home valued at 600 million won pays about 1 million won in comprehensive property taxes annually, while a house valued at 900 million won incurs a special ownership tax of slightly over 2 million won a year. The comprehensive property taxes are collected in addition to regular property taxes.

   Under the Lee government's revision, owners of homes valued at less than 900 million won each will be exempt from the tax, while the amount of comprehensive property tax for the owner of a 900 million won home will be reduced to a mere 20,000 won.

   The revision is subject to approval from the National Assembly. Separately, the Constitutional Court will soon rule on the constitutionality of the comprehensive property tax.

   But the outlook for parliamentary approval of the property tax reduction bill remains murky in the face of fierce resistance from opposition parties, as well as ordinary citizens. Interestingly, many lawmakers from even the ruling Grand National Party (GNP) are also opposed to Lee's bid to repeal the special property tax for the rich, apparently for fear of backlash from voters.

   In a poll of 1,000 adults conducted by a Seoul-based civic group, 83.7 percent insisted that the present hefty property taxes on owners of high-end homes should be retained or reinforced. Notably, 66.4 percent of the respondents said the taxation system should be revised in a way that levies heavier taxes on owners of expensive real estate properties.

   "The Lee government will surely face severe public resistance if it pushes ahead with policies that are favorable to the wealthy and privileged. The president must heed public opinion," Rep. Lee Yong-sup of the main opposition Democratic Party said.

   "Instead of pursuing indiscriminate tax reduction policies, the government has to pay greater attention to reviving the sluggish economy and improving the public livelihood," said Rep. Lee, who served as a construction minister under Roh.

   Within the GNP, lawmakers elected from the affluent southern Seoul districts agree to the proposed reduction of 'property wealth' taxes, but the majority of ruling party lawmakers are reluctant to extend support.

   "I'm opposed to the tax revision bill because it is lacking in measures to crack down on real estate speculation," said Rep. Won Hee-ryong of the GNP.

   "The revised bill will surely benefit owners of multiple expensive homes, in particular. What is worse, the timing for the tax reduction policy is regrettable, as the government is now supposed to pay full attention to revitalizing the economy and taking care of the fragile financial sector."
Ordinary citizens and netizens, already disappointed by Lee's repeated appointments of wealthy and scandal-ridden figures as Cabinet ministers and senior presidential secretaries, are reacting cynically.

   "The Lee government is only interested in the welfare of the richest 2 percent of the population. The remaining 98 percent of the people have to pay more taxes to make up for the tax revenue shortfall. This government is really working for the rich," a netizen grumbled in a post on the Web portal Naver.

   Shortly after his inauguration in February, Lee came under fire for filling almost all his Cabinet and secretarial posts with people with academic, regional and religious connections to him.

   Critics and opposition parties even coined new words using names of popular TV actresses, like "Kang Bu Ja" and "Ko So Young," sneering at the academic, religious and regional common points of Lee's Cabinet ministers and senior secretaries. Even the conservative media denounced Lee's personnel policy, but the overly self-confident president turned a deaf ear to the criticism.

   Kang Bu Ja is a combination of initials of Korean words meaning "land-rich people living in southern Seoul," while Ko So Young stands for Korea University, Somang Church and the area of Youngnam, also known as the Gyeongsang provinces. Lee spent his childhood in the southeastern province of Gyeongsang, graduated from Korea University and had long attended Somang Church in southern Seoul before being elected president last December.

   Adding to the public resentment, many of the Cabinet ministers and senior presidential secretaries were found to be involved in ethically and legally problematic real estate transactions years ago. Real estate speculation is not illegal, but is morally criticized in Korea.

   The public approval ratings of the embattled president have remained in the low 20-percent range in various media polls released recently.

   ycm@yna.co.kr
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