The Democratic Party holds a debate on the financial investment tax to pressure the opposition... Han Dong-hoon says "The signal to abolish it must be given now"

Song Eon-seok Holds Policy Debate on Abolishing Capital Gains Tax
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Choo Kyung-ho "1% of Investors Hold Half of Investments... Impact on 99%"

Han Dong-hoon, leader of the People Power Party, urged on the 22nd for the prompt abolition of the financial investment income tax, stating, "The financial investment income tax must be abolished, and a signal of its abolition should be given to the public at an early, not delayed, time. If we wait until autumn or the end of the year, it will be too late. It must be done now."

Han made these remarks while attending the "Policy Debate on the Abolition of the Financial Investment Income Tax for the Protection of the Domestic Capital Market and Individual Investors," hosted by Song Eon-seok, chairman of the National Assembly's Strategy and Finance Committee, and the People Power Party Policy Committee, at 10 a.m. in the National Assembly main building.

Addressing the Democratic Party, which advocates maintaining the financial investment income tax, Han said, "They are responding to this discussion with a divisive argument of 1% versus 99%. They say, 'Since this tax targets only the wealthy 1%, the remaining 99% have nothing to do with it,' but that does not work," adding, "All investors know that it will damage the asset formation of the remaining 99%. This cannot be interpreted as a simple binary division."

[Image source=Yonhap News]

Floor leader Choo Kyung-ho also added, "In the 1 to 99 ratio, 1% of investors hold an investment share far exceeding 50% of the total investment capital," and explained, "Even if we accept the criticism that the tax targets the 1%, it will affect more than 14 million investors overall."

Not only Han but also floor leader Choo Kyung-ho, Policy Committee Chairman Kim Sang-hoon, Secretary-General Seo Beom-su, and other party leaders gathered at the debate. Although the meeting between the two party leaders scheduled for the 25th was postponed due to Lee Jae-myung, leader of the Democratic Party, contracting COVID-19, it is interpreted that the People Power Party has already started preemptive pressure by setting the abolition of the financial investment income tax as an agenda item for the meeting.

Lee recently expressed the need to defer or ease the financial investment income tax, but within the Democratic Party, many opinions favor implementing the tax as planned, so it has not yet been established as the party's official stance.

In his opening remarks, Chairman Song said, "Lee signaled that he recognizes there is a problem, but Jin Sung-jun, chairman of the Democratic Party Policy Committee, stated, 'This goes against the party's identity. It must be implemented,' and he was reappointed as chairman," criticizing, "This confuses investors about whose words truly represent the Democratic Party's sincerity."

During the debate, concerns were raised that introducing the financial investment income tax amid capital outflows from the domestic stock market would deepen the Korea discount. In fact, as of the first half of this year, individual investors sold 7.3798 trillion won worth of domestic stocks and purchased 7.8676 billion dollars (approximately 10.873 trillion won) worth of U.S. stocks during the same period.

Professor Kim Sang-bong of Hansung University's Department of Economics pointed out, "Since investors earning profits exceeding 50 million won account for only about 1% of all investors, it is difficult to view this as a tax cut for the wealthy; it is effectively taxing 14 million individuals," and added, "Moreover, the introduction of the financial investment income tax is excessive in relation to inclusion in the advanced country index of Morgan Stanley Capital International (MSCI), a global stock index provider that plays an important role in resolving the Korea discount."

Jung Eui-jung, president of the Korea Stock Investors Association, proposed as an alternative to abolishing the financial investment income tax, "Instead of lowering the current transaction tax rate of 0.18% to 0.15%, it should be maintained to secure 1 trillion won in tax revenue, and realistic taxation should be imposed on short-selling profits as is done in the U.S. and Japan," suggesting, "The current foreign capital gains tax threshold on stock holdings of 25% or more should be changed to 5% or more. Just as we used to consider foreign investors' interests, we must also consider the public's interests."

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