[Oil Refinery Windfall Tax Also on the Table]②Opposition Calls for Windfall Tax Introduction...Government and Ruling Party Reluctant

Banks and Oil Companies Benefiting from High Inflation and Interest Rates
Yoon: "Bank Profits Should Return to Struggling Citizens"
Government May Change Stance on Oil Companies' Windfall Tax Opposition

[Asia Economy Reporter Choi Seoyoon] A debate is underway over whether to impose a windfall tax on banks and oil companies that have benefited from high inflation and high interest rates. As not only vulnerable groups but also middle-class citizens complain about the hardships caused by high inflation and high interest rates, the opposition party is raising its voice to hasten the introduction of a windfall tax.

The government and the ruling party oppose the windfall tax on oil companies. This stance differs from the president's criticism of banks' interest businesses.

The Democratic Party is launching a full-scale offensive. On the 14th, Lee Jae-myung, leader of the Democratic Party of Korea, pointed out, "The country must move toward a society where it takes responsibility for everyone's basic life," adding, "The wealth of our society inevitably concentrates in the hands of a few who own the means of production."

Democratic Party of Korea leader Lee Jae-myung is speaking at the Supreme Council meeting held at the National Assembly on the morning of the 15th. [Image source=Yonhap News]

Lawmaker Woo Won-sik also emphasized, "Introducing a windfall tax to use the profits of large corporations as resources to guarantee the basic living of the people is a very just tax policy and expands the horizon of a welfare state."

The windfall tax is based on Article 18 of the Petroleum Business Act. Article 18 of the Petroleum Business Act states that the government can levy charges on petroleum-related companies that earn significant profits due to fluctuations in oil prices for the purpose of stabilizing oil supply and prices. Reflecting this, there is talk of amending the Corporate Tax Act.

On the other hand, the government and the ruling party are actively opposing it. Government officials such as Prime Minister Han Duck-soo and Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho have also voiced a unified opinion that the windfall tax is inappropriate.

However, the atmosphere changed after President Yoon Suk-yeol said on the 13th, "Bank profits should be considered so that benefits can return to struggling citizens, self-employed people, and small business owners."

President Yoon Suk-yeol is speaking at the 13th Emergency Economic and Livelihood Meeting held on the morning of the 15th at the Yongsan Presidential Office building in Seoul.
[Photo by Presidential Office Press Photographers Group]

Plans are underway to prepare related measures, including expanding support programs for vulnerable groups and increasing the social responsibility of banks through the financial authorities. Accordingly, there is speculation that the government's stance on the windfall tax on oil companies could change at any time.

As the debate drags on, oil companies are taking a wait-and-see approach. This is a different attitude from the past when they proactively set up special funds. In 2008, when oil prices were high and the best performance was recorded, and discussions about imposing a windfall tax took place in the political sphere, oil companies prepared a special fund worth 78.6 billion won.

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