President Moon Supports Individual Investors... Financial Investment Industry Divided Between 'Positive VS Concern'

President Moon Jae-in (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Boryeong] President Moon Jae-in has instructed that the financial tax reform plan "should not be a way to discourage individual investors' enthusiasm," making revisions inevitable. The financial investment industry, which had been requesting improvements to the financial tax reform plan, is showing a generally positive response. However, concerns have also been raised that the lack of policy consistency and predictability could cause market confusion.

On the 17th, President Moon Jae-in stated, "This financial tax reform plan should not shrink the stock market or discourage the enthusiasm of individual investors," adding, "We must support individual investors who have upheld the stock market during the difficult times of the COVID-19 pandemic and aim to revitalize the stock market." This is interpreted as a response to the strong backlash from individual investors in the capital market against the previously announced financial tax reform plan.

The financial investment industry responded positively to President Moon's remarks. A financial investment industry official said, "What President Moon said is perfectly natural," explaining, "Considering investor sentiment and market logic, the direction should naturally align with what the market and investors want." He added, "It seems that the president has the will to foster the capital market," and "It is appreciated that he represents the sentiments of the capital market and investors."

A securities industry official also said, "It seems the government is inclined not to discourage individual investors' willingness to invest funds," adding, "From that perspective, it is quite encouraging."

Another financial investment industry official said, "It appears to mean that, even if not immediate abolition, at least some direction regarding the securities transaction tax should be indicated," and "The government seems likely to present supplementary measures that suggest a direction toward abolishing the securities transaction tax."

The financial tax reform plan includes a provision that capital gains from domestic listed stocks will be taxed at 20% (for taxable income up to 300 million KRW) after an annual deduction of 20 million KRW. The securities transaction tax is scheduled to be reduced by 0.1 percentage points in two stages from 2022 to 2023.

However, concerns have also been expressed regarding President Moon's recent directive.

A securities firm official said, "The fact that the president says to change it raises concerns that the system might be made simple and one-off," pointing out, "It does not seem like a permanent policy has been considered."

An asset management company official said, "Recently, with real estate policies as well, the constant flip-flopping of policies is frustrating," adding, "From an investor's perspective, this will likely result in significantly reduced predictability of policies."

This content was produced with the assistance of AI translation services.