Yae Proposes 2-Year Deferral Compromise on Financial Investment Income Tax Amid 'Donghak Ant' Backlash (Comprehensive)

Opposition Proposes 'Conditional Suspension' of Financial Investment Tax... "Lower Transaction Tax, Maintain Capital Gains Tax"

[Image source=Yonhap News]

[Image source=Yonhap News]

[Asia Economy Reporter Koo Chae-eun] Five days after Lee Jae-myung, leader of the Democratic Party of Korea, expressed concerns regarding the ‘Financial Investment Income Tax,’ the party’s Policy Committee proposed a conditional postponement plan for the tax.

On the 18th, Kim Sung-hwan, chairman of the Democratic Party’s Policy Committee, held a press conference at the National Assembly and stated, “On the condition that the government withdraws its policy to lower the securities transaction tax from the current 0.23% to 0.15% and raise the non-taxable threshold for stock capital gains tax to 10 billion KRW, if the government adheres to these conditions, our party will actively consider a two-year postponement of the Financial Investment Income Tax.”

The Financial Investment Income Tax is a system that requires a 20% tax (25% on income exceeding 300 million KRW) on income exceeding certain amounts from financial investments such as stocks, bonds, funds, and derivatives (50 million KRW for stocks and 2.5 million KRW for others). It is scheduled to be implemented in January next year.

Regarding this, the Democratic Party had defined it as a ‘tax cut for the ultra-rich’ and maintained the position that the Financial Investment Income Tax should be implemented as planned next year. However, after Lee Jae-myung expressed concerns about the forced implementation during a closed-door Supreme Council meeting on the 14th, there was a change in stance.

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@

Park Hong-geun, floor leader of the Democratic Party of Korea, is attending the party strategy meeting held at the National Assembly on the 8th and delivering opening remarks. Photo by Yoon Dong-joo doso7@

Chairman Kim stated, “It is true that there have been several discussions due to various concerns about introducing a new tax amid the recent stock market decline.” He then explained the background of the conditional postponement plan, saying, “The core of introducing the Financial Investment Income Tax is not to create a new tax but to reduce the securities transaction tax to lessen the burden on so-called retail investors during transactions, especially to reduce taxes on losses.”

The Democratic Party also stated that while postponing the introduction of the Financial Investment Income Tax, it is difficult to accept the government’s plan to maintain the current major shareholder taxation system but drastically raise the threshold for stock capital gains tax payment from 1 billion KRW per stock to 10 billion KRW. Chairman Kim opposed this, saying, “Although this is a package, it clearly constitutes a tax cut for the ultra-rich. Over 20 years, the non-taxable threshold was lowered from 10 billion KRW to 1 billion KRW, but now it is being raised back to 10 billion KRW, going against 20 years of history.” He explained that the two conditions presented that day “are matters of enforcement ordinances, not legislation, so the government must clarify its position on this part” and called it a “public promise.”

Regarding opposition from Democratic Party members of the National Assembly’s Strategy and Finance Committee, including Shin Dong-geun, Kim said, “Our position was decided through a joint meeting of the Strategy and Finance Committee members, including the floor leader, the Political Affairs Committee, and the party’s Policy Committee from just after lunch until 2 p.m.”

Democratic Party lawmaker Hong Sung-guk, who attended the press conference, said, “The reason for proposing this plan is that from the investor’s perspective, lowering the transaction tax by introducing the Financial Investment Income Tax is actually a great benefit, but there seems to be a lot of misunderstanding in the market.” He added, “Since lowering the transaction tax is connected, I believe it will effectively support small investors.”

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