ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

A Study on the Effective Tax Rate of Property Taxation: Focusing on the Comprehensive Real Estate Holding Tax System

  • Lee, Young-Hwan National Assembly Budget Office
  • Shin, Young-Im National Assembly Budget Office

Asian Tax Journal Vol. 10 No. 2 (2009), pp. 139-170

Abstract

This study evaluates the 2008 government proposal for the reform of the Comprehensive Real Estate Holding Tax based on two criteria. First, it examines various methods for measuring effective tax rates and analyzes the changes in the tax burden resulting from the reform. Since the market value is the direct determinant of the tax base for property taxes, it is desirable to measure the effective tax rate relative to market value. However, given that many taxpayers in Korea lack sufficient income to cover property taxes or face burdens that are disproportionate to their expected income, it is necessary to consider effective tax rates relative to income and expected income depending on policy objectives. Second, the study identifies several areas for improvement in calculating the revenue effects of tax law amendments. Specifically, it demonstrates that the government's conventional method of calculating revenue changes based on the 'previous year' tends to underestimate the structural reduction in tax burden, suggesting that using a 'base year' comparison is more appropriate.

Keywords

  • Comprehensive Real Estate Holding Tax
  • Effective Tax Rate
  • Revenue Effect

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