Professor Lee Jung-gu: "Imsa-je has zero positive effects... It means giving up more than 10 trillion won in tax revenue"

Strong Criticism of Rental Business Registration System via Own SNS
"Abolishing Only the Rental Business Registration System Can Greatly Reduce National Debt"

Professor Lee Joon-gu, Department of Economics, Seoul National University. (Photo by Professor Lee Joon-gu's homepage)

[Sejong=Asia Economy Reporter Kim Hyunjung] Professor Emeritus Lee Joon-gu of Seoul National University’s Department of Economics, who had criticized the Housing Lease Business Registration System (Imsa-je) as a 'cancer,' pointed out that the government is voluntarily giving up tax revenues exceeding 10 trillion won due to this system.

On the 3rd, Professor Lee posted an article titled "The Housing Lease Business Registration System from the Perspective of Tax Expenditure" on his Facebook, stating, "The positive effects of this system are almost zero."

He explained, "Sound fiscal management has become an important issue in our society, and if unnecessary tax expenditures are properly eliminated, tax revenues can increase significantly. The various tax benefits provided under the Housing Lease Business Registration System are typical examples of tax expenditures."

In his explanation, Professor Lee estimated the comprehensive real estate tax that lease business owners should pay by using unrealistic and extreme assumptions (approximately 1.5 million households owning rental properties, an average official property price of 100 million won, and a tax rate of 1%). He calculated the tax to be 1.5 trillion won. Considering that the actual average property price is much higher than 100 million won and that the current tax rate for multiple homeowners is up to the 3% range, he estimated that the additional comprehensive real estate tax that could be levied would be over 10 trillion won.

He criticized, "The problem is why such enormous tax expenditure benefits are given to lease business owners," adding, "The government is effectively giving up trillions of won in tax revenues to maintain a system that yields no real benefits." He continued, "Is it appropriate to provide tax benefits for expenses incurred by Samsung Electronics for R&D investment, or is it appropriate to provide tax benefits to those who hoard houses and wait for housing prices to rise? The answer is obvious."

From the perspective of fiscal soundness, he explained, "Even abolishing only the tax benefits given to lease business owners can significantly reduce national debt," and added, "Proper taxation of lease business owners is not only a matter of restoring tax justice but will also play a major role in dramatically improving the worsening fiscal soundness day by day."