PSPD English Newsletter, May 2019
- 2019.05.20 (17:08:45)
This month of PSPD
Proposal to Prevent Conflict of Interests for High Ranking Government Officials
PSPD’s campaigning on conflicts of interest among high ranking government officials goes back to the year 2003 when PSPD demanded that the former Minister of Science and ICT, Jin Dae-je, sell his Samsung Electronics shares. Even though a blind trust system was introduced in 2005, conflicts of interest and issues surrounding non-declaration remain.
On April 22, PSPD’s Center for Administrative Watch published a ‘legislative proposal and an evaluation of the current draft bills on avoiding conflicts of interest among high ranking government officials.’ They did this by comparing the original Prohibition of Corruption and Favors Act that the government proposed to prevent conflicts of interest back in 2013, with the latest draft bill submissions to the National Assembly.
The proposal includes various aspects. If there is a concern over a conflict of interest, the officer needs to be excluded from the position involved, and employment of his/her family members by the related organization should be limited. Using unannounced information to pursue personal interests must be prohibited and contacts with retired government officers need to be restricted. Considering the consensus around conflict of interest in society, PSPD urged the National Assembly and the Administration to rush the enactment of the Avoidance of Conflict of Interest Act (Provisional).
Citizens Petition for the Whistleblower Professor Ryu
Professor Ryu Young-Joon is a public-interest whistleblower who revealed the fabrication of evidence for a paper regarding stem cell research by Hwang Woo-seok. In 2016, during a TV interview, Ryu raised a question over whether Hwang attended a meeting hosted by the blue house where he asked for the approval for stem cell research at Hospital Cha. He also asked whether the easing of regulations on stem cell research was connected to either former president Park Geun-hye or the influential figure, Jeong Yoon-hoi. As a result, Ryu was sued for defamation by Hwang, but was sentenced not guilty in the court of the first instance.
However, the prosecutor’s office appealed this ruling and demanded in the appeal court that Ryu received a year prison sentence. PSPD’s Public Interest Law Center collected online signatures from 657 citizens to support Ryu and delivered them to the court. Ryu was found not guilty in the appeal court. The use of lawsuits to silence public-interest whistleblowers is an issue that needs to be resolved in our society.
Better Protections for Tenants in Public Housing
Due to its encouragement by the Moon Jae-in administration, the volume of privately-owned public housing rose to 1.4 million as of the end of March 2019. As registered public housing, leases are for 4 or 8 year periods and rent increases are limited to 5%. This helps with stability for tenants and prevents excessive speculation on real estate.
PSPD’s Center for People’s Livelihood Improvement published a report to identify problems in our current privately-owned public housing registration system by comparing it to that of New York City since 1984. The report showed that the current system fails to mandate information disclosure, such as the current status of the housing and rent history, when rental issues arise. It also showed that there are excessive benefits to owners, such as property and income tax reductions, while obligations are minimal. In addition, efforts to inform tenants of their rights or to notify them on the registration of the house remain inadequate as a proper management system is not in place. Therefore, PSPD urges the administration to amend the Housing Lease Protection Act as soon as possible.
To ensure the protection of tenants’ rights, real estate agents need to adequately understand the rights and responsibilities of tenants and landlords alike and explain them to both parties. PSPD sought answers from the Ministry of Land and Transportation, over the training and qualifications at the Korea Association of Realtors; the issue of registered public housing; and the rights and responsibilities of tenants.
Fair Taxation of Assets
Although the publicly-listed real estate prices in 2019 are an improvement on the previous year, it is extremely low compared to the standard set by the Real Estate Public Disclosure Act. PSPD’s Center for Tax Reform analyzed the publicly-listed prices provided by the Ministry of Land and Transportation and found that missed taxable income would reach 4 trillion KRW due to the differences in publicly listed prices. Among them, the biggest beneficiaries of the mishap are the owners of real estate worth over 900 million KRW, which are subject to general property taxes.
The effects of taxation on reducing inequality in Korea, as measured by the Gini index, remain very limited. Taxation reduces the Gini coefficient by a mere 8.7%, which is much lower than the OECD average of 31.3%. Korea does have progressive taxation but fails to lower inequality due to tax exemptions, improper taxation of rental income and the separated filing of capital gain taxes, all of which reduce the tax burden on higher income earners.
The Center for Tax Reform published a report entitled Fair Taxation for all Brackets, arguing that the threshold of 20 million KRW for rental income and capital gains, fails to meet the principles of fair taxation and that the tax system unfairly benefits high-income earners and large property owners. To earn 20 million KRW in capital gains, one needs about one billion KRW in the capital. One can assume these large capital holders would have other income sources. In this situation, PSPD raised the issue that 20 million KRW being the threshold for the general capital gains tax does not meet the qualification for fair taxation. For justice in taxation, there has to be fair taxation for all brackets of income. 20 million KRW has been the threshold for the general capital gains tax since 2013.