Song Eon-seok, the floor leader of the People Power Party, held a press conference related to current issues at the National Assembly in Yeouido, Seoul, on the 19th.
[Financial News] On the 19th, the People Power Party criticized President Lee Jae-myung for hinting at the abolition of the Long-term Holding Special Deduction (Jangteukgong) via X (formerly Twitter) by saying, “This is an approach that does not understand the market or tax law,” and urged, “Please study more.”
During the press conference, Song Eon-seok stated, “The claim to abolish Jangteukgong, labeling it a mere privilege, seems to stem from a misunderstanding of the system’s purpose and ignorance of tax principles.”
Previously, on the 18th, President Lee Jae-myung countered the People Power Party’s argument that the abolition of Jangteukgong would lead to a ‘tax bomb’ by calling it a “logical contradiction and a blatant false incitement,” and argued that “one should not deceive the public with such lies to rationalize a wrongful, self-serving argument.”
In response, Song explained, “Jangteukgong is a mechanism designed to encourage long-term holdings of real estate to prevent speculative demands from inflating real estate prices in the short term, which could harm genuine buyers.”
He further criticized that “Jangteukgong is not a privilege but a minimum mechanism to prevent tax distortion,” noting that its abolition could lead to excessive tax burdens as it would tax non-actual income portions. “Without Jangteukgong, most of the sale proceeds from selling a house would go towards capital gains tax, making it impossible to purchase a similar home of equal size and quality. It would restrict the freedom to relocate and fail to protect property rights,” he added.
Moreover, he pointed out, “Claims that abolishing Jangteukgong and increasing taxes will lead to more properties on the market and stabilize the market have no basis. Instead, many experts are concerned that strengthening capital gains tax will cause a freezing effect in real estate, delaying sales, suppressing transactions, and increasing price pressure.”
He concluded, “Policies cannot be solved by enforcement of power, but must be based on economic principles. The real estate market operates on a leverage system with intricate expectations and psychology. Approaching it with simple incitements and superficial messages will only amplify market distortions.”