Chairperson Lim Ija Criticizes Capital Gains Tax Threshold Easing: "Retail Investors Outraged... Lee Administration Cannot Overcome the Market"

"Democratic Party Loses Market Trust by Pursuing Conflicting Bills"
"Results of Korea-US Tariff Negotiations Must Be Closely Examined"

Chairperson Lim Ija of the Strategy and Finance Committee criticized the government regarding the stock market crash following the announcement of its tax reform plan, stating, "The anger of retail investors was immediately reflected in the market," and added, "The Lee Jaemyung administration and the Democratic Party will not be able to overcome the market."

On August 5, speaking with reporters, Chairperson Lim said, "If the major shareholder threshold for capital gains tax is relaxed, retail investors will suffer significant losses," and analyzed, "The stock market, which is the fastest indicator of public sentiment, reacted first."

On July 31, the government announced a tax reform plan that included: ▲an increase in corporate tax, ▲an increase in securities transaction tax, and ▲a lowering of the major shareholder threshold for capital gains tax (from 5 billion won to 1 billion won). The following day, on August 1, the KOSPI index plunged by 3.88% compared to the previous day, causing market turmoil. More than 120,000 people agreed to a petition opposing the relaxation of the major shareholder threshold for capital gains tax.

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Chairperson Lim stated, "I understand that there are many concerns within the Democratic Party regarding the relaxation of the major shareholder threshold," and added, "Even if the Democratic Party pushes ahead, it may be discussed in the Tax Subcommittee, but I am opposed to it."

She explained that raising tax rates to secure a tax base, as announced by the government, is not desirable. Chairperson Lim pointed out, "During the Moon Jaein administration, when the corporate tax rate was raised from 22% to 25%, corporate tax revenue actually decreased," emphasizing that the tax base depends more on economic or market conditions than on tax rates themselves.

She also criticized the government and the Democratic Party for simultaneously pursuing legislation to tighten regulations on corporations along with the tax reform plan. Chairperson Lim said, "While sending conglomerate leaders abroad for Korea-US tariff negotiations, the government is pushing for tax reform domestically," and pointed out, "By pursuing conflicting bills, the market's trust is being undermined."

Regarding the Korea-US tariff negotiations, she stressed that the remaining negotiations are even more important and that the government should transparently disclose relevant information. While the Democratic Party and the government have praised the results of the negotiations, Chairperson Lim believes that the greater issue is that Korea has lost its Free Trade Agreement (FTA) status with the United States as a result of this negotiation.

The Strategy and Finance Committee plans to hold a full meeting on August 6 to receive a report from the government on the negotiation results. This measure was taken in response to some confusion arising from differences in stance between the Korean government and US President Donald Trump regarding the negotiations.

Chairperson Lim stated, "We need to discuss areas of public concern and those requiring cooperation with the government to successfully conclude the remaining talks," and added, "Given the significant uncertainty surrounding the timing and method of the $350 billion investment in the US, as well as the potential opening of the agricultural and fisheries sectors, the government must share information with the public to ensure their right to know."

She continued, "We need to examine whether industrial hollowing-out might occur domestically due to investment in the US, and what impact the tariff negotiations on industries such as automobiles will have on partner companies," and announced, "Following tomorrow's full committee meeting, we will hold an emergency forum with industry representatives and discuss necessary responses at the party level."

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