National Assembly Opens on the 20th; Fast-Track Bill and Tax Controversy for Non-Resident Single-Homeowners

The National Assembly will hold its first plenary session of the August extraordinary session on the 20th. According to a summary of reports by Yonhap News, the passage of the so-called “shortened term bill,” which bundles the appointment deadline for the chief of the Corruption Investigation Office for High-ranking Public Officials (CIO) to three days, is likely during this session. Conversely, the real estate bill increasing the tax burden for non-resident single homeowners is seeing diverging paths as disagreements between the ruling and opposition parties remain unresolved. With the President’s constitutional amendment proposal also in the mix, the August legislative landscape stands at a crossroads between negotiation and confrontation.

‘Appoint Within 3 Days’… What the Shortened Term Bill Changes

The core of the shortened term bill is simple. If a candidate for the CIO chief is recommended, the President must appoint them within three days of the recommendation. The CIO is an agency dedicated to investigating corruption among high-ranking public officials, a task difficult for the prosecution and police; the longer the position of chief remains vacant, the greater the controversy over an investigative vacuum.

The point to note is that the law’s direct subject is President Lee Jae-myung. Under the current system, the President could effectively delay the appointment of a recommended candidate indefinitely. If the law is enacted, the institutional vacuum caused by delaying appointments will be structurally blocked, and the scope of the President’s appointment discretion will narrow accordingly.

The reason for the positive outlook on its passage is also clear. The shortened term bill is an ordinary bill, requiring approval by a majority of incumbent members for passage. The People Power Party has emphasized that it holds nine more seats than the threshold needed to block a constitutional amendment. However, the weight of the seats needed to stop a constitutional amendment differs from those needed to block a single ordinary bill. If the majority ruling party pushes forward, it is difficult for the opposition party to overturn the result with its votes alone.

Tax Hike for Non-Resident Single Homeowners, The Issue is Residency Status

The point of collision regarding the real estate bill is tax design. The government is pushing for a tax reform that increases the comprehensive real estate holding tax and capital gains tax burdens for non-resident single homeowners—those who own one home but do not live in it. The comprehensive real estate tax is levied annually on owners of high-value property, while capital gains tax is applied to the profit from selling a house.

President Lee Jae-myung backed the policy direction with remarks emphasizing the need to organically combine drastic supply, fair taxation, and meticulous finance. This is interpreted as a design to increase the tax burden on holdings of an investment nature while increasing supply. It is possible to interpret this as a judgment that non-resident holdings lie on the boundary between actual demand and investment demand.

The People Power Party’s resistance stems from here. The core concern is that houses kept in their hometowns or inherited from parents by metropolitan workers could fall into the tax net. If the taxation standard shifts from the number of properties owned to residency status, holders who were previously outside the net of multi-homeowner regulations will face a new burden. The impact on the housing market is also significant. While there is a scenario where an increased holding burden leads to more selling by non-resident single homeowners, accelerating the supply of jeonse (long-term lease) housing, there is also the possibility that if the transition rate is too steep, the market could dry up and intensify the jeonse shortage. The direction depends on the tax rate design and the grace period.

Constitutional Amendment Skirmish Casts a Shadow over Legislative Negotiations

The variable freezing the legislative landscape is the discussion on constitutional amendment. President Lee stated that a four-year single term was a presidential campaign promise and that he is willing to accept the shortening of his own term if necessary. People Power Party Chief Spokesman Park Seong-hoon recently criticized President Lee’s meeting with ruling and opposition party lawmakers for a round of golf as a “cheap trick to co-opt some lawmakers who support constitutional amendment,” going as far as to call it a “buildup to avoid trial after leaving office through a constitutional amendment that allows re-election.”

Nevertheless, clues for negotiation are emerging even from within the opposition party.

“If President Lee Jae-myung clearly states that he will not pursue re-election, the opposition party must also actively participate in the constitutional amendment discussion.”

This is the stance People Power Party Rep. Kim Tae-ho revealed to Yonhap News on the 16th. This is read as conditional consent to engage in decentralization-type constitutional amendment negotiations in exchange for a declaration not to run for re-election. The problem is trust. A constitutional amendment bill cannot physically pass without the approval of two-thirds of the incumbent members, and given the deep mutual distrust, pains are expected before the negotiating table opens.

After the 20th Plenary Session, Eyeing the September Regular Session

The short-term outlook is relatively clear. The shortened term bill has a high probability of passing during the plenary session on the 20th, upon which President Lee’s appointment discretion will significantly decrease. The real estate bill is different in nature. If a compromise is not found by the 20th, the tax reform bill will move to the September regular session, and during that void, the market will pay the price of policy uncertainty.

A breakthrough may be surprisingly close. The example of President Lee holding a ruling-opposition-party-public livelihood economic consultation meeting to discuss responses to the Middle East crisis illustrates this. Accumulating a history of cooperation on livelihood issues unrelated to constitutional amendment could be the starting point for improving relations. Whether Rep. Kim Tae-ho’s conditional card translates into negotiation language between the ruling and opposition parties, and the density of contact between the two parties in September, will likely determine the political direction just as much as the vote result on the 20th.