Ruling, opposition parties clash over government's 2026 tax reform plan

The government's 2026 tax reform plan has drawn sharply divided reactions from the political establishment, with a fierce battle between the ruling Democratic Party of Korea and the opposition People Power Party expected during National Assembly deliberations running through November.

Han Byung-do, acting leader and floor leader of the Democratic Party, said at a floor strategy meeting Tuesday that the reform package amounted to "a tax normalization plan" that actively supports strategic industries and domestic investment, strengthens benefits for ordinary citizens, young people and local communities, and rationally adjusts preferential tax treatments that have been ineffective or overly concentrated among a narrow group.

On the real estate tax provisions in particular, Han said the plan "protects owner-occupiers with a single home while rationally adjusting benefits that have been excessively concentrated on ultra-high-priced properties and non-residential homes, calibrating them to property value and actual residency."

Han directed criticism at the People Power Party, saying it was "repeating the tired slogan of 'tax bomb' while hiding the support and protection measures." He added that the Democratic Party would "carefully examine policy effectiveness, public acceptability and regulatory predictability during the National Assembly review process, further strengthening necessary support and refining areas that need improvement."

People Power Party floor leader Jeong Jeom-sik took a sharply different view, writing on Facebook Tuesday that the government's real estate tax reform plan was "in a word, a declaration of a tax bomb drop." He called it "the worst possible tax hike" — one that simultaneously raises both holding taxes and transaction taxes while ignoring an OECD recommendation that transaction taxes should be lowered when holding taxes are raised.

Jeong said the plan to "drastically increase the comprehensive real estate tax and capital gains tax burden on owners of high-priced properties and non-resident single-home owners amounts to punitive taxation in effect," adding that "the burden will ultimately be passed on to jeonse and monthly rent prices, causing them to surge and spreading the economic hardship to ordinary people."

Turning to President Lee Jae Myung, Jeong said the president's real estate policy was "running in the complete opposite direction from the promises candidate Lee Jae Myung made." "With this, every promise made by candidate Lee Jae Myung has collapsed," he said. "Even former President Moon Jae-in never reversed his position 180 degrees to this extent — breaking his campaign pledges so thoroughly."

The Democratic Party notably refrained from issuing a formal statement immediately after the government unveiled the plan on Monday, signaling a cautious approach. Rep. Oh Gi-hyeong, the ruling party's floor manager on the National Assembly's Finance and Economy Planning Committee, wrote on Facebook that the reform package was "a bill proposed for future legislative review by the National Assembly," adding that "the Assembly will deliberate on it sequentially through the tax subcommittee and the standing committee, taking into account a wide range of public debate."

Concern also emerged within the ruling party over a provision described as an "anti-share-price-suppression bill." Democratic Party Rep. Lee So-young wrote on Facebook that, as the original architect of the measure, she "could not hide her embarrassment," and pledged to "correct as many problems as possible before deliberations conclude at the end of November."

People Power Party members of the Finance and Economy Planning Committee, meanwhile, held an emergency press conference at the National Assembly immediately after the plan was announced, strongly condemning the government for seeking to collect an additional 3.4 trillion won ($2.38 billion) in taxes even as a semiconductor boom drives record-breaking surplus tax revenue.

The lawmakers took particular issue with the overall real estate tax policy, tightened eligibility requirements for the family business inheritance deduction, and the creation of a new productive-finance individual savings account. They called the reform "a bait-and-switch tax overhaul" and said the Lee Jae Myung administration would need to amend more than 11 laws and 115 tax expenditure items to push through "this patchwork of regressive changes." "The People Power Party will fight to the end to protect the rights and assets of the people against this tax-first ideology," they said.

Rep. Ahn Cheol-soo also targeted the ISA-related provisions, saying the government had "abolished the 20 million won carryover limit and cut the maximum contract period to five years," which he said amounted to "pushing the entire nation into mindless domestic stock investing." He said the reform "appears to have been designed by someone with no understanding of the stock market whatsoever and must be scrapped entirely."