The government will extend tax breaks designed to facilitate real estate transactions to help bolster South Korea's domestic economy that has been hurt by a worldwide slump.
The Ministry of Strategy and Finance and Ministry of Public Administration and Security said the 50 percent cut on acquisition and registration taxes for properties will be maintained for at least one year after the original Dec. 31 deadline.
Starting in Sept. 2006, Seoul lowered acquisition and registration taxes from 4 percent of the sales price to 2 percent to counter a sharp drop in real estate deals. In the first four months of this year total tax earnings from real estate transactions fell to 2.9 trillion won from 3.5 trillion tallied for the same January-April period in 2008.
The central government, however, said that since collecting less acquisition and registration taxes could hurt the fiscal health of local administrations, counter measures are needed to boost possible side effects. Both taxes are collected by regional governments.
The ruling Grand National Party said in relation to the cuts that it may be prudent to extend them indefinitely, while the main opposition Democratic Party said cuts in all transaction costs must be balanced out with a higher tax burden on real estate holdings.