Democratic Party's Financial Transaction Tax Debate Features 'Kim Geonhee'... "Stock Manipulation Prevention Tax" vs "Logical Leap"

Disagreement Over Previously Agreed Commercial Law Amendment
"Chaebols Will Oppose" vs "Just Need Public Support"

Even at a Democratic Party of Korea debate on the implementation or postponement of the Financial Investment Income Tax (FIIT), Kim Geon-hee was mentioned. The proponents of implementation argued that the FIIT could detect stock price manipulation, but the opponents countered that this was a logical leap. The two sides also showed differing views on improving corporate governance, such as the amendment to the Commercial Act, on which they had previously found common ground.

Park Chan-dae, floor leader of the Democratic Party of Korea, is speaking at the Democratic Party of Korea policy members' meeting held at the National Assembly on the 24th under the theme "A Happy and Just Republic of Korea, How Should the Financial Investment Income Tax Be Implemented?" Photo by Kim Hyun-min kimhyun81@

Kim Seong-hwan, a Democratic Party lawmaker on the FIIT implementation team, said at a policy debate held on the 24th at the National Assembly in Yeouido, Seoul, "Those uncomfortable with the FIIT are Kim Geon-hee and the stock price manipulation forces," adding, "In the Deutsche Motors stock price manipulation case, 91 borrowed-name accounts, totaling 157 accounts, were used, but (if the FIIT is introduced) trading through borrowed-name accounts will become impossible." He also pointed out, "If the FIIT is postponed, stock price manipulation forces will run rampant in the stock market," and "This will increase the opacity of the Korean stock market."

Democratic Party lawmaker Lim Gwang-hyun said during the Q&A session, "In the Deutsche Motors stock price manipulation case, Kim Geon-hee is estimated to have earned about 2 billion won in profits but did not pay income tax," adding, "Until now, the National Tax Service had no financial investment income data, but if high income is earned, a tax investigation will be conducted, and depending on the case, judicial authorities may also file charges." He further added, "I think the FIIT is the Kim Geon-hee tax, the Deutsche Motors stock price manipulation prevention law."

On the other hand, the FIIT postponement team argued that the link between the FIIT and preventing stock price manipulation is weak. Democratic Party lawmaker Lee Yeon-hee said, "All transaction data is with the Korea Exchange and the Korea Securities Depository," adding, "If there are abnormal signs in a stock, it can be designated as a management stock and monitored." She also emphasized, "If the securities transaction tax disappears, wash trading will become more rampant, which will actually allow stock price manipulation to be neglected." The securities transaction tax is being phased out gradually alongside the introduction of the FIIT.

They also argued that to catch stock price manipulation, it is sufficient to supplement existing systems rather than introducing the FIIT. Democratic Party lawmaker Lee So-young said, "If the stock price manipulation monitoring system is insufficient, the Financial Supervisory Service's monitoring function or the National Tax Service's data monitoring authority should be strengthened," adding, "The claim that stock manipulators refrain from manipulation because they fear taxes lowers the investment motivation of ordinary investors, which actually acknowledges the negative impact of the FIIT."

There were also differences of opinion regarding the amendment to the Commercial Act. The postponement team argued that corporate governance should be improved while delaying the FIIT implementation, whereas the implementation team countered that this would also be a thorny path. Lawmaker Lim asked the postponement team, "Improving corporate governance is more difficult because conglomerates oppose it. It seems both the FIIT and stock market modernization will be missed." In response, lawmaker Lee So-young said, "The amendment to the Commercial Act has not even been adopted as a party policy yet, but at least we should make such efforts before worrying," adding, "We can persuade the government and ruling party, and if that fails, gain public opinion and amend the Commercial Act."

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