Rising Voices Against 'Financial Investment Tax'... Yoon Sang-hyun Also Says "We Must Face Economic Reality"

"Investment Sentiment Cools, Deepening Financial Instability and Economic Contraction"

[Image source=Yonhap News]

[Asia Economy Reporter Lee Ji-eun] As the opposition party pushes to enforce the introduction of the financial investment income tax (Geumtu Tax) in January next year, voices opposing the Geumtu Tax are growing louder within the ruling party.

Yoon Sang-hyun, a member of the People Power Party and considered one of the next party leadership candidates, expressed his opposition on his social network service (SNS) on the 9th, stating, "While the principle that taxation exists where income exists may justify the need to impose a tax on capital gains through the Geumtu Tax, the timing of its introduction needs to be carefully decided considering the negative impact on the market."

He said, "Currently, due to high global economic uncertainty, stock prices have fallen sharply, and investment sentiment is frozen solid. In such a situation, if a new capital gains tax is imposed on financial investment income, it could further cool investment sentiment, exacerbating financial instability and economic contraction."

Yoon cited Taiwan’s case, where after the introduction of a stock transfer tax in 1989, stock prices dropped by 3,300 points within a month, leading to the repeal of the tax. He expressed concern, saying, "Many young people in the stock market are suffering from falling stock prices, and if the Geumtu Tax implementation causes further declines, the despair among the youth will deepen."

He added, "Rather than obsessing over the unfounded claim that this is a tax cut for the rich, the Democratic Party should have the wisdom to face economic realities. For now, it would be more constructive to discuss measures such as the government’s campaign promise to improve the short-selling system, to protect the rights and fairness of small shareholders investing in the stock market, as well as to defer the financial investment tax until interest rates and exchange rates stabilize and household burdens decrease."

The Geumtu Tax is a system that imposes a 20% tax on profits exceeding 50 million KRW annually from investments in financial products such as stocks, with the implementation date set for January next year. Although the Yoon Suk-yeol administration announced in next year’s tax law revision plan that it intends to postpone the tax for two years, the opposition insists that "it should be implemented as scheduled."

Within the ruling party, voices supporting the postponement of the Geumtu Tax are strong. Kwon Seong-dong, a member of the People Power Party, expressed concern, saying, "The Democratic Party insists that this tax targets the top 1%, but if major players in the stock market evade taxes and move elsewhere, a stock price crash is inevitable." Jo Kyung-tae, also from the People Power Party, expressed a similar view, stating, "The Geumtu Tax should be postponed until the market stabilizes."

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