Yoon Seok-yeol "If Capital Gains Tax on Stocks Expands, Completely Abolish Securities Transaction Tax"… Announces Capital Market Pledge

Focus on Protecting Individual Investors from Damage
Securities Industry Criticizes "Lack of Specificity"

[Image source=Yonhap News]

[Asia Economy Reporters Minwoo Lee and Juni Park] Yoon Seok-yeol, the presidential candidate of the People Power Party, has announced capital market-related pledges, including the complete abolition of the securities transaction tax. As he is recently focusing on courting the votes of the 2030 generation, the pledges emphasize protecting individual investors from harm.

On the morning of the 27th, Candidate Yoon held a press conference at the Seoul Central Party Office and stated, "We will create a fairer market system so that the value of our companies is properly evaluated, and build an advanced stock market where companies and investors can 'win-win' together." The detailed policies he presented include ▲abolishing the securities transaction tax ▲granting preemptive rights to existing investors in the case of spin-offs of new businesses ▲restricting unlimited share sales by insiders ▲considering the introduction of a short-selling circuit breaker ▲and reforming the investigation and punishment process for securities crimes.

The abolition of the transaction tax aims to strengthen tax support for individual investors. The government plans to impose a 20-25% capital gains tax on all listed stocks with annual capital gains exceeding 50 million KRW starting in 2023. Candidate Yoon opposes the double taxation of stock capital gains tax and transaction tax. In a press release that day, he explained, "In principle, when introducing a stock capital gains tax for general investors, the securities transaction tax (including the special rural tax) should be abolished. However, due to uncertainties in securing tax revenue, the current government is pursuing a phased reduction rather than complete abolition," adding, "If the scope of the stock capital gains tax expands, I will abolish the transaction tax." Additionally, since the stock capital gains tax does not provide preferential treatment based on holding periods, he pledged to apply a lower preferential tax rate for long-term holdings.

Regarding the issue of short selling, he said, "We will adjust higher collateral ratios for institutions compared to individual investors to ensure individual investors are not disadvantaged." He also plans to consider introducing a 'circuit breaker' that bans short selling when excessive stock price declines occur. The pledge also includes investor protection measures related to spin-offs of new businesses. To protect parent company shareholders, preemptive rights will be granted. Furthermore, regulations will be introduced to limit unlimited on-market sales (including off-hours sales) to a certain extent within a specific period to prevent large-scale sales by corporate insiders. He also promised to improve the practice where only controlling shareholders benefit from management rights by granting stock purchase claims to shareholders of the acquired company when management control changes through stock acquisition. Additionally, he pledged to reform the entire process from investigation to punishment of securities crimes, such as insider trading and stock price manipulation, to strengthen the effectiveness of sanctions.

The securities industry immediately responded to Candidate Yoon's capital market reform pledges by saying they "lack specificity." In particular, the short selling issue was only mentioned as a "rational improvement," and the introduction of a circuit breaker is essentially just a different name since short selling is already banned during excessive stock price declines. Hwang Se-woon, a senior researcher at the Capital Market Institute, said, "The abolition of the transaction tax will be welcomed by investors," but added, "How much preemptive rights will be granted to parent company shareholders is a very sensitive issue." He noted that more concrete proposals are needed to make a proper judgment.

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