'14% Separate Taxation on Ants' Government Bond Investment' Delayed Within the Year Due to Strong Opposition from the Giant Opposition Party

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[Asia Economy Reporter Lee Hyun-joo] The government's plan to introduce the purchase of government bonds for individual investors next year has become difficult for the time being.

The government had planned to amend the Restriction of Special Taxation Act to allow the purchase of government bonds for individual investors with a total limit of 200 million KRW per person and to apply separate taxation on interest income generated if held until maturity, aiming to broaden the demand base for government bonds and provide individuals with a long-term savings instrument. However, the related bill, the Government Bond Act amendment, was postponed in the National Assembly's Planning and Finance Committee, making the timing for reconsideration unclear.

Shin Dong-geun, the opposition party whip of the National Assembly's Planning and Finance Committee, is presiding over the Economic and Fiscal Subcommittee meeting held at the National Assembly on the 5th. Photo by Yoon Dong-joo doso7@

According to the National Assembly on the 28th, the Government Bond Act amendment failed to pass the scheduled plenary session in the afternoon and is expected to be discussed in earnest at the standing committee only in February next year. Shin Dong-geun, the chairman of the Economic and Fiscal Subcommittee of the Planning and Finance Committee and opposition party whip from the Democratic Party, said, "January is difficult due to many schedules, and discussions will likely take place only in February."

The Government Bond Act amendment includes provisions to introduce government bond products limited to individuals and to allow the Minister of Strategy and Finance to issue government bonds for individual investors at a pre-announced interest rate, granting benefits such as the application of additional interest rates. The Ministry of Strategy and Finance planned to apply a 14% separate tax rate on interest income generated if held until maturity, up to a total purchase amount of 200 million KRW per person.

Earlier, the amendment to the Restriction of Special Taxation Act, which newly established separate taxation on interest income from government bonds for individual investors, was designated as a budget-related bill and passed the National Assembly plenary session on the 23rd. However, since the Government Bond Act amendment, which should have been approved earlier, was stalled, the amendment to the Restriction of Special Taxation Act passed in the plenary session has become difficult to implement.

Ryu Seong-geol, the ruling party whip of the Planning and Finance Committee from the People Power Party, said at the party's floor meeting the day before, "The ruling and opposition party whips had already agreed on this matter, but suddenly the Democratic Party is using the excuse that their whip was absent from the subcommittee due to personal reasons to claim that additional discussions on the Government Bond Act are necessary and is evading responsibility," adding, "We strongly urge the Democratic Party, as the majority party in the National Assembly, to keep that promise even now."

The Democratic Party reportedly expressed that in-depth review of the bill is necessary and that providing additional tax benefits to individual investors is excessive given the already high government bond interest rates. They also expressed regret over the procedure in which the Restriction of Special Taxation Act was passed in the plenary session despite the Government Bond Act amendment not passing in the Economic and Fiscal Subcommittee. A National Assembly Planning and Finance Committee official said, "If discussions take place and it passes early next year, the implementation of the Restriction of Special Taxation Act is possible," but added, "Even if discussions occur, it is doubtful whether it will properly pass."

The ruling party plans to wait for measures from the National Assembly Secretariat and then reconsider the schedule of the Economic and Fiscal Subcommittee.

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