The Chaebol Returns To The Presidency 1967 [EN]: Chapter 48

48. Second Reform: Real-Name System for Real Estate

Shoddy apartment construction was also a problem.

The civil servant apartments in Ichon-dong, western Seoul, completed in 1967, had water leaking in every room, water pooling on the floors and walls, frequent breakdowns of flush toilets, and gas leaks due to blocked coal briquette [a type of compressed coal used for heating and cooking] flames, causing great inconvenience to the residents.

The President, well aware of the history of apartments, placed a blueprint for a five-story apartment with a coal briquette boiler, flush toilet, and 18-pyeong size (approximately 600 square feet) on his desk.

The Minister of Construction and Transportation recognized it immediately.

“Ah! Amazing! If you started a construction company right now, you’d be the top priority for contracts!”

The attendees exclaimed in admiration.

The Prime Minister, with a bitter taste like a sack of barley left out in the rain [a Korean idiom for feeling dejected or disappointed], could only stare blankly from the side.

It was a thorny seat for bureaucrats who had solutions submitted by their subordinates only to have the credit snatched away by their superiors.

American loans arrived.

Based on the dollars, the Han River banks, which had been flooded, were cleared, and the construction of 100,000 public apartments began.

Plans for north-south riverside roads along the Han River were also designed.

The sound of construction Korea’s iron hammers echoed throughout the country.

* * *

A monthly economic trend meeting was held.

It was mainly hosted by the Prime Minister or the Minister of Economic Planning, but the President personally oversaw it every time.

The person in charge reported.

“From 1961 to 1966, land prices nationwide recorded an average annual increase of 27.6%. This year alone, we expect a 13% increase in the first quarter.”

The ongoing land development projects in conjunction with the full-scale economic development plan and the continuous ‘inflation’ trend due to rapid growth were accelerating land price increases.

Even during Chairman Wang’s era, land prices recorded a record increase of 71% in the three years from 1968 to 1970.

“In particular, commercial and residential areas in newly developed cities and their candidate sites have skyrocketed, ranging from 10 to 100 times higher in some regions.”

Deputy Prime Minister Kim said.

“Some land price increases are inevitable due to new city development, but the problem is the influx of black money [illegally obtained or undeclared funds].”

The President asked.

“What kind of black money are you talking about?”

“Lump sums of money that have lost their way due to the real-name financial system are flowing into commercial land.”

“Hmm, they’re exploiting the fact that land is still unregistered.”

“That’s right. Public officials who have obtained development information are leading the way. In particular, members of the National Assembly are acquiring development areas and leading speculation after obtaining national land development plans.”

“This is outrageous! We must crack down on this. We urgently need measures to eradicate real estate speculation. Let’s establish a real estate holding tax for multi-homeowners and a tax on non-agricultural land for those who don’t farm directly.”

The Minister of Economic Planning said.

“Before establishing a real estate tax, we need to reorganize the land legislation first. Due to pre-modern land transaction methods, unorganized land legislation, and frequent nominee ownership [holding property under someone else’s name to conceal the true owner], there are many difficulties in imposing taxes.”

“Then it’s time to standardize and unify land-related legislation and implement a real-name system for real estate to ensure transparency in real estate transactions.”

“Real-name system for real estate!”

The audience stirred.

The Prime Minister said.

“While the real-name system for real estate is an indispensable law to prevent speculation and the rich-get-richer phenomenon, unlike the previous real-name financial system, it should be discussed in the National Assembly rather than through a presidential emergency order.”

“…….”

“It falls under the principle of tax law related to taxation, and lawmakers are showing resistance to the method of the President leading the way, skipping the National Assembly. Also, unlike the real-name financial system, the real-name land system is closer to a social agreement to reduce side effects rather than an urgent matter.”

It was bitter advice, but it was true.

He could not repeat the process of issuing a presidential emergency order and then having the National Assembly ratify the follow-up bills later.

However, if the National Assembly discussed the real-name land system law and land holding tax, it was highly likely to be stalled.

This is because the speculators who leaked development information were high-ranking public officials and members of the National Assembly.

In fact, Prime Minister Kim Jong-pil was also a wealthy landowner in Seosan and other areas of Chungcheong Province.

He was representing the interests of the landowners.

The President said.

“That’s good advice. We need a political solution.”

* * *

The Blue House office.

He discussed measures to eradicate real estate speculation with Deputy Prime Minister Kim.

Deputy Prime Minister Kim said.

“As the Prime Minister said, National Assembly discussion is inevitable because it is related to taxation. However, they are the ones subject to sanctions, so they will inevitably be passive in reform, Your Excellency.”

“I think so too. It’s not illegal to own land itself, so if we unconditionally brand them as real estate speculators, there will be significant side effects. Moreover, if the rate of real estate appreciation is higher than the tax rate, it will be useless.”

“That’s right. There is a possibility of infringing on private property and being unconstitutional. They will seize on these loopholes and resistance will be strong.”

“However, public officials and elected officials need to disclose their financial status. It’s the voters’ right to know.”

“…….”

“Let’s exploit the weaknesses of those who wear the mask of justice. We can adjust the order of passing laws.”

“…….”

Shortly after, a law on the criminal records and asset disclosure of public officials of the 3rd grade or higher and elected officials was submitted to the National Assembly.

No lawmaker openly opposed the disclosure of criminal records or assets.

Opposing criminal records would be seen as a coming-out that they had many criminal convictions.

Asset disclosure could not be opposed upfront as an extension of public officials’ duty of integrity.

It was possible to solve the problem by hiding large sums of cash in a home safe instead of depositing them in a bank or converting them into gold bars.

The problem was real estate.

However, there was a customary way to do this.

By distributing it in the names of relatives (nominee ownership), it was possible to reduce excessive assets and avoid suspicion of being a speculator or corrupt person.

It was even possible to do a clean-living cosplay [acting or pretending to be someone else] with nominee ownership, leaving only a single room.

The Speaker of the National Assembly declared the passed bill.

“I declare that the bill on the criminal records of public officials of the 3rd grade or higher and elected officials has been passed!”

Bang! Bang! Bang!

Next was the real estate holding tax.

It was a bill that imposed heavy taxes on those who owned non-agricultural land without directly farming it and those who owned three or more houses in proportion to their holdings.

This bill also passed the National Assembly safely, despite a large number of objections, because it could be avoided by distributing it through nominee ownership.

After the two bills were passed, the President finally submitted the Real-Name System for Real Estate Bill to the National Assembly.

The main contents of the bill, entitled the ‘Special Act on Real Estate Registration,’ were as follows:

– In order to induce the conversion of existing nominee-owned real estate, no one shall register real property rights in another person’s name under a nominee agreement.

– Existing nominee registrations acquired before the introduction of the real-name system for real estate must be converted to registration of the actual owner within a grace period of one year.

– If these real-name registration obligations are violated, a penalty of 30% of the real estate value will be imposed.

– Ownership transfer registration must be completed within 60 days from the date of acquisition, and if this is violated without reason, a fine of up to 5 times the registration tax amount will be imposed.

– If a person subject to a fine does not register for 3 years, a penalty of 30% of the real estate value and imprisonment for up to 5 years or a fine of up to 200 million won will be imposed.

As the contents of the bill were read, the lawmakers’ outcry was like a hornet’s nest being stirred up.

“You put name tags on money, and now you’re going to put name tags on real estate!”

“It could bring confusion to long-standing commercial activities. It could shrink the economy. It’s too early.”

“Is it a crime to make a lot of money? It’s an anti-market policy to witch-hunt the rich. I am absolutely opposed!”

The reality was that they were afraid that if all the real estate held under nominee ownership was revealed, it would be revealed that they had speculated.

Those who had been protesting then realized what the three bills were ultimately aimed at and lamented in unison.

“We’ve been had again, we’ve been had again!”

“In the end, they processed the Real Estate Holding Tax and Public Official Asset Disclosure Act first in order to disclose the assets of those elected and impose taxes.”

“How can we be fooled every time?”

Even high-ranking public officials joined forces to block the bill.

* * *

The Deputy Prime Minister reported to the President.

“After surveying the opinions of lawmakers, more than half are opposed, regardless of party.”

The President said.

“Hmm, a counterattack from the vested interests… Good. Conduct a poll. Let’s break through head-on.”

An opinion poll of over 5,000 people was conducted for a week through a polling organization.

The sample survey sample is usually around 1,000 people, but a sample of 5 times that size was selected to increase credibility.

– Do you support the Real-Name System for Real Estate?

The poll results showed a whopping 87% in favor.

The President clenched his fist as he looked at the newspaper with the poll results.

“I knew it!”

He called the Chief of Staff.

“Tell the Minister of Public Information to schedule an interview with a daily newspaper. I will interview myself.”

“Yes, Your Excellency!”

Major daily newspapers were providing a service where the President was interviewed as a special article to coincide with their founding day.

* * *

The Blue House reception room.

The President interviewed the editor-in-chief, reporter, and camera reporter of a newspaper.

The President’s main theme was the real-name system for real estate.

The editor-in-chief asked.

“What is the purpose of the real-name system for real estate?”

“It is to prevent real estate speculation and realize tax justice by prohibiting nominee ownership, which registers in another person’s name.”

“The real-name system for real estate has been submitted to the National Assembly, but it is currently sluggish. What do you think is the reason?”

“87% of the people support the bill, but the National Assembly opposes it, which is truly strange. Isn’t the National Assembly the representative body of the people? Why isn’t the National Assembly on the side of the people?”

The editor-in-chief asked.

“Opponents worry that if their assets are disclosed, they will be portrayed as if the rich are criminals. They say that money should not be the object of hatred in a capitalist society. In a word, it is an anti-market policy.”

The President drank omija tea [a traditional Korean tea made from dried magnolia berries] and replied.

“If money is not an object of suspicion, why refuse to disclose the real name? It does not infringe on property rights, but it is about making transactions transparent.”

“Ah, that’s logically inconsistent.”

“It is because of those who try to hide it that money becomes black money and an object of hatred. If money is the price of sweat, it should be revealed and praised. Isn’t that healthy capitalism? What policy is more market-oriented than this?”

“Then what do you think about compromising with the parliament?”

“I have waited patiently, respecting the parliament as much as possible, for the parliament to process the reform bill, but if the parliament engages in sabotage and uses tricks to pass the session and abolish it, I, as president, will have no choice but to use the emergency order card. Why are lawmakers and high-ranking public officials blocking the passage of laws that benefit the people? What are they not proud of?”

“…….”

“Blocking this is admitting that they are the vested interests themselves.”

The President’s interview was published in the newspaper in large letters.

– Opponents of the Real-Name System for Real Estate are Vested Interests!

As the President pressured with an emergency order, the parliament, which was pushed back in terms of justification, reluctantly submitted the bill to the National Assembly in a special session.

The Speaker of the National Assembly announced the results of the vote.

“I declare that it has been passed with 85 votes in favor, barely exceeding the majority!”

Bang! Bang! Bang!