Government-Opposition Debate on Financial Investment Tax Expands to Stock Capital Gains Tax Front

Yeo Proposes Conditions for Capital Gains Tax Deferral
Government Refusal May Lead to Legal Amendments Review

[Image source=Yonhap News]

[Asia Economy Reporter Park Jun-yi] The Democratic Party of Korea, which proposed a conditional postponement of the introduction of the financial investment income tax (Geumtu Tax) to the government and ruling party, is expanding the front to easing the stock capital gains tax payment targets. The Democratic Party set the withdrawal of the increase in the major shareholder criteria for capital gains tax as a condition instead of postponing the Geumtu Tax, and when the government decided to reject this, they countered again, saying they are "not giving up on tax cuts for the wealthy." The opposition party is considering raising not only the stock capital gains tax payment criteria but also issues such as lowering the securities transaction tax from enforcement ordinances to higher laws if the government does not accept the postponement conditions.

Kim Seong-hwan, chairman of the Democratic Party’s Policy Committee, said in a phone interview with Asia Economy on the 21st, "If the stock capital gains tax payment target is raised from 1 billion won to 10 billion won as per the government’s plan, that is a typical tax cut for the wealthy, but they say nothing about it," and added, "The government’s opposition is contradictory." Earlier, the Democratic Party proposed actively considering a two-year postponement of the Geumtu Tax introduction, which is the government’s plan, if the securities transaction tax is further lowered from 0.20% (government plan) to 0.15% and the major shareholder criteria for stock capital gains tax are withdrawn (from 1 billion won to 10 billion won). However, the government rejected it citing reasons such as tax revenue reduction.

The opposition counters the government’s opposition with the logic that "easing the stock capital gains tax payment criteria also reduces tax revenue." According to the government, lowering the securities transaction tax rate from the current 0.23% to 0.15% would reduce tax revenue by a total of 1.9 trillion won, which is 1.1 trillion won more than the 800 billion won reduction when lowered to 0.20%.

Chairman Kim said, "It is true that postponing the Geumtu Tax and lowering the securities transaction tax rate further will reduce tax revenue." Shin Dong-geun, the opposition party’s secretary of the National Assembly’s Strategy and Finance Committee, also pointed out in a phone call that "the total comprehensive real estate tax amount is around 4 trillion won, which is a decrease from previous years, and corporate tax is also expected to decrease by about 6 trillion won," adding, "The government cannot criticize us for tax revenue reduction."

[Image source=Yonhap News]

The Democratic Party plans to focus on raising the major shareholder criteria for stock capital gains tax instead of tax revenue and use the ‘tax cuts for the wealthy’ frame. If the condition for postponing the Geumtu Tax is not accepted, they will revert to their original position. Secretary Shin Dong-geun said in a phone call, "If the government does not accept the Democratic Party’s proposal, we will proceed with the original plan," and added, "If the government does not make a decision, we will not amend the law and will proceed in a way that the Geumtu Tax postponement is not possible." Chairman Kim also explained, "We will try to inform the public more fully about this point (the opposition’s position) this week."

Accordingly, at the National Assembly’s Planning and Finance Committee’s Tax Subcommittee starting today, issues such as lowering the securities transaction tax and withdrawing the increase in the stock capital gains tax payment criteria are expected to be the focus of debate. The Democratic Party is reportedly reviewing countermeasures such as raising enforcement ordinance matters to laws. A Democratic Party Policy Committee official said regarding the lowering of the securities transaction tax and withdrawal of the increase in the stock capital gains tax payment criteria, "It is also being reviewed within the party," and added, "If the government does not clearly state that it will implement the conditions we requested, we will consider raising it to a law."

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