Lowering Separate Tax Rate on Dividend Income Sparks Wealthy Tax Cut Controversy... Koo Yooncheol Says "Tax Revenue to Decrease by Less Than 200 Billion Won"

The government has projected that if the top tax rate for separate taxation on dividend income is lowered to 25%, down from the original government proposal of 35%, tax revenue will decrease by less than 200 billion won. The National Assembly continued to raise concerns about tax cuts for the wealthy.

On the 10th, Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol responded at the plenary session of the National Assembly's Special Committee on Budget and Accounts regarding the decision to lower the top rate for separate taxation on dividend income, which is currently under discussion, to a level below the original government proposal after high-level discussions between the administration and the ruling party. Deputy Prime Minister Koo stated, "Lowering the separate taxation rate will result in a decrease in tax revenue, but the reduction in the dividend income tax rate may also stimulate dividend payouts, which could increase revenue," adding, "Taking these factors into account, the decrease is expected to be less than 200 billion won."

On the 7th, a comprehensive policy inquiry for the first budget review of the Lee Jae-myung administration is underway at the plenary meeting of the National Assembly's Budget Committee. 2025.11.7 Photo by Kim Hyunmin

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Seo Wangjin, a member of the Innovation Party for the Motherland, commented on this issue, saying, "Although this may not be data from the Ministry of Economy and Finance, there is an analysis estimating that lowering the top rate to 25% would result in a tax cut of about 460 billion won," and added, "According to this calculation, over five years, tax revenue would decrease by a significant 2.3 trillion won."

Assemblyman Seo also pointed out, "In addition, when separate taxation on dividend income is implemented, the top 0.1% will account for 46% of all dividend income, and the top 1% will account for 67.5%," adding, "In this structure, where there is an urgent need to normalize tax revenue due to structural limitations, continuing to push this policy could be criticized as a tax cut for the wealthy."

In response, Deputy Prime Minister Koo stated, "While there may be such concerns about tax cuts for the wealthy, if dividend payouts become more common overall, ordinary investors will also have the opportunity to receive dividends."

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