Lee Jae-myung Seeks Opinions from Opposition on 'Financial Investment Tax Deferral' Proposal

Policy Committee Holds Consecutive Closed Meetings and Policy General Assembly... Steps Back from Forceful Push
"Will Go Through Opinion Gathering Process"... Lawmakers' Positions Tighten, Painful Negotiations Expected

Lee Jae-myung, leader of the Democratic Party of Korea, is attending the Supreme Council meeting held at the National Assembly on the 9th and delivering opening remarks. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Koo Chae-eun] The Democratic Party Policy Committee, which has been advocating for the introduction of the Financial Investment Income Tax (Fintax) in January next year, appears to be stepping back following party leader Lee Jae-myung's remarks on postponement. The Policy Committee is once again gathering opinions to check if there are any overlooked aspects.

On the 15th, Kim Sung-hwan, chairman of the Democratic Party Policy Committee, held a closed meeting with Democratic Party members of the National Assembly's Political Affairs Committee to collect opinions on Fintax, and decided to further discuss the matter through a policy members' general meeting. In a phone interview with Asia Economy, Chairman Kim explained, "The purpose is to hear opinions on what might have been missed regarding the introduction of Fintax."

Fintax is a system that imposes a tax of 20% (25% on amounts exceeding 300 million KRW) on profits exceeding 50 million KRW annually from investments in financial products including stocks. The related law was passed in December 2020 through bipartisan agreement and is scheduled to be implemented in January next year. However, due to rapid changes in the financial market, the government announced in July's tax law revision that the introduction would be postponed by two years to 2025. President Yoon Seok-youl also expressed a stance to postpone Fintax during his presidential campaign, including abolishing the stock transfer tax.

Among Democratic Party members of the Political Affairs Committee, the opinion to postpone rather than push forward with Fintax is predominant. A committee member said in a phone interview, "It is true that there are concerns because the government's overall policy leans towards tax cuts," but added, "There is significant concern that immediate implementation could negatively affect investment sentiment." Kim Byung-wook, senior vice chairman of the Policy Committee, also agrees with the purpose of Fintax but believes that in the current situation of economic crisis and increased financial market instability, pushing forward with Fintax requires careful consideration.

[Image source=Yonhap News]

[Image source=Yonhap News]

However, there remains a strong stance to adhere to the "January next year implementation," so considerable internal conflict is expected before party consensus is reached. Shin Dong-geun, opposition party floor leader on the National Assembly's Strategy and Finance Committee, posted on social media, "Last week, all Democratic Party members of the Strategy and Finance Committee released a statement insisting that Fintax should be implemented as scheduled from next year," adding, "We will strive to faithfully uphold the resolution of all committee members regardless of any difficulties."

Chairman Kim's position is to first gather opinions. He said, "Leader Lee expressed concerns about the perception that Fintax would be pushed through forcefully, but this does not mean a decision to postpone has been made," and added, "While maintaining the stance of 'implementation in January next year,' there are internal concerns that require careful review, hence the opinion gathering." Regarding worries that high-net-worth investors might exit the stock market due to Fintax, he said, "Many of those investors have already been paying taxes under the stock transfer income tax exemption criteria, so we do not expect a significant outflow of major investors."

Democratic Party floor spokesperson Oh Young-hwan said in a back briefing after the floor countermeasure meeting, "We expect members to express their opinions on Fintax during the free discussion at the party meeting," and added, "We will quickly decide the party's stance after collecting expert opinions from members of the Political Affairs and Strategy and Finance Committees."

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