What is Lee Jae-myung's Third Real Estate Measure?... 'Tax Increase on Speculative Real Estate and Introduction of Basic Income Land Tax'

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Lee Jae-myung, Governor of Gyeonggi Province, proposed the introduction of a 'real estate blind trust system' for high-ranking public officials, the abolition of tax reductions and loan privileges for housing rental businesses and corporations, the expansion of long-term public rental housing, and, as a solution to curb ruinous real estate speculation, the increase of taxes on speculative real estate and the introduction of a 'basic income land tax.'

Governor Lee specifically stated that if the government delegates authority to Gyeonggi Province through ordinances, he will first introduce the basic income land tax.

On the 9th, through Facebook, Governor Lee said, "The real estate problem, including the skyrocketing house prices, is due to unearned income (land rent) based on the limited nature of land, and land rent inevitably increases with economic development and urban concentration," adding, "Such unearned income cannot and should not be eliminated, and since the Constitution includes the concept of public land ownership, it is appropriate to recover it through taxation so that benefits are shared evenly."

He further stated, "The current real estate problem is a serious social issue caused by a combination of excess liquidity, policy distortion and loss of policy trust, anxiety, speculative hoarding, lenient taxes, and owner-favored policies," warning, "Measures to suppress the increase of unearned income, such as transaction permit systems or regulations on loans and transactions, may have short-term effects but are unlikely to be fundamental long-term solutions and often cause a balloon effect."

Therefore, Governor Lee argued, "While allowing free transactions, unearned income that inevitably arises and increases must be recovered as much as possible through real estate taxes (acquisition, holding, and transfer taxes)," and added, "For owner-occupied single homes, a typical level of real estate tax and tax reductions may allow some unearned income, but for non-residential housing or non-business real estate owned by corporations, most unearned income should be recovered through strong tax increases to make investment or speculation impossible."

He also added, "For a tax increase that faces resistance to succeed, it must be designed so that the tax increase benefits taxpayers rather than being punitive, and to reduce distrust in taxation, it is necessary to let taxpayers experience that taxes are used entirely for their benefit."

Furthermore, he explained, "If taxes must be collected for policy goals like disaster basic income (disaster relief funds), it is best to pay them as local currency-type basic income that connects to national income and consumption, thereby simultaneously achieving welfare and economic revitalization, rather than spending and eliminating them."

Governor Lee also proposed the introduction of the basic income land tax as a solution to curb real estate speculation.

He said, "The basic income land tax has multiple complex effects, including curbing real estate speculation through the recovery of unearned land income, tax increases without tax provisions, welfare expansion and inequality mitigation, and economic revitalization through consumption expansion in the era of the Fourth Industrial Revolution, where structural recession is a concern due to job and consumption reduction," promising, "If nationwide implementation is difficult, after setting the tax item and the maximum tax rate (within 0.5-1% combining property tax and comprehensive real estate tax) in the Local Tax Basic Act, the decision on implementation and detailed tax rates can be delegated to metropolitan city and province ordinances, and Gyeonggi Province will take the lead in implementation."

Governor Lee expressed a strong will, saying, "I will directly prove the effects of the basic income land tax in curbing real estate speculation, expanding welfare, mitigating inequality, and revitalizing the economy."

Finally, Governor Lee said, "Housing is an essential item for residence, and the heavy taxation of real estate should be limited to speculative investment assets, so the purchase of owner-occupied homes by the homeless and single owner-occupied homes should naturally be excluded from heavy taxation," and urged the government, "Please turn the current real estate crisis into an opportunity to open the path to a fair and sufficient real estate tax increase and basic income that fundamentally blocks ruinous real estate speculation, expands welfare, revives the economy, and leads a model K-economy in the era of the Fourth Industrial Revolution."

Earlier, on the 5th, Governor Lee proposed to the government the introduction of a 'blind trust system' for high-ranking public officials related to real estate as a solution to curb ruinous real estate speculation. Then, on the 7th, he presented the abolition of tax reductions and loan privileges for housing rental businesses and corporations and the expansion of long-term public rental housing as solutions.