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The Impacts of Changes in Publicly Noticed Value of Real Estate on Local Finance

Park, Joon 1 Lee Sanghoon 2 Park Sangsu 2

1서울시립대학교
2한국지방세연구원

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ABSTRACT

The purpose of this study is to figure out impacts on local finance by the changes in property taxes by the changes in Publicly Noticed Values of Real Estate (PNV) which are different by property type and region. Based on the analysis on the changes, this study found that the gaps between local finances are getting greater by the changes in PNV. If the ratio of PNV to market price is changed to 80~100%, it is estimated that 2.0~4.7 trillion won in Property Tax (PT), 0.5~1.2 trillion won in Local Resource and Facility Tax and Local Education Tax (a surtax of PT), and 0.8~2.3 trillion won in Comprehensive Real Estate Holding Tax (CREHT) will increase respectively. In this case, local tax revenue is expected to increase by 4.5~10.9%. Local revenue including local subsidies is expected to increase by 2.0~5.1% in overall. The ratio of the local tax tax revenue of upper 20% regional level governments to lower 20% and that of local revenue are getting greater as of 7.81~8.16 and 6.52~6.65 respectively. Given the worsening regional balance in Korea, an appropriate measures needs to be developed to address the problem of widening gaps of local finance by the changes in PNV. Shared-tax revenue for fiscal equalization can be a feasible option to reduce the gaps between local governments. In addition to this, an improvement of criteria of local distribution of the revenue of CREHT to local governments can also contribute to the better balance.

Citation status

* References for papers published after 2022 are currently being built.