**Easing More Than the Government’s Plan of 35%**
On the afternoon of the 7th, the closing prices of the stock market were displayed on the electronic board in the dealing room at Hana Bank’s headquarters in Jung-gu, Seoul. On this day, the KOSPI closed at 3,953.76, down 72.69 points (1.81%) from the previous trading day, and the KOSDAQ index closed at 876.81, down 21.36 points (2.38%).
The government and the ruling party have reached a consensus to ease the highest tax rate for separate taxation of dividend income, targeted at high-dividend companies, from the existing government plan of 35%. They are reportedly in agreement with the Democratic Party’s opinion to lower it to 25%. This measure is interpreted as an effort to improve investor sentiment amidst recent fluctuations in the KOSPI, which has been supporting the approval ratings of the Lee Jae-myung administration.
On the 9th, at a high-level party-government meeting held at the Prime Minister’s official residence in Samcheong-dong, the Democratic Party, the government, and the presidential office agreed on this approach. Senior spokesperson Park Soo-hyun announced after the meeting with reporters that there was a shared understanding of the need to channel market liquidity from the real estate market to the productive sector of enterprises in the face of growing instability in the housing market.
Park further stated, “There was a consensus on the need to devise a reasonable adjustment plan for the highest tax rate on separate taxation of dividend income to maximize the activation effect of dividends without significantly impacting tax revenue. The specific tax rate level will be decided through discussions during the regular National Assembly session.”
Although specific figures were not disclosed by the party and government on that day, it is reported internally that they have decided to ease the highest tax rate to 25%. In July, the government proposed separating dividends from comprehensive financial income taxation and applying a top tax rate of 35%. However, following calls within the ruling party to lower the top tax rate for the system’s effectiveness, the government accepted this position. This decision prioritizes boosting the stock market over concerns of “tax cuts for the wealthy” raised by some within the ruling party.
Kang Hoon-sik, the presidential chief of staff, stated in his opening remarks that “various opinions including the tax rate applicable to separate taxation of dividend income have been presented and discussed over the past two months,” and emphasized the need for the party, government, and presidential office to respond to the opinions expressed by the people.
In addition, the party and government decided to promote a bill to transfer the authority over national university hospitals from the Ministry of Education to the Ministry of Health and Welfare to nurture them as regional hubs. They also plan to address the imbalance of medical personnel across regional medical specialties by introducing a regional physician system and institutionalizing remote medical services, which have been operated as pilot projects, into a full-fledged program.