After the worst market crash, the volatility of the stock market has increased, and in the political arena, there is intense controversy surrounding the abolishment of the financial investment income tax.
The government had been pushing for the abolition of the financial investment income tax since earlier this year to be implemented next year, but ultimately failed to pass the threshold of the 21st National Assembly, leading to its ultimate demise.
However, with the recent worsening market situation, discussions have reignited around this issue, focusing on the key points regarding the financial investment tax.
The financial investment income tax imposes a 20% tax on income exceeding 50 million won from financial investments such as stocks, bonds, and funds.
Originally planned to be implemented from January last year, the timing was postponed to January 1 next year through the tax reform plan announced in July 2022.
As concerns grow over the U.S. economic downturn affecting our stock market, discussions on the abolishment of the financial investment tax have resurfaced.
Leading the discussion in the political arena is none other than Han Dong-hoon, the leader of the People Power Party, who has been advocating for the abolition of the financial investment tax, pressuring Democratic Party of Korea Floor Leader Park Chan-dae to engage in a public debate on the issue.
Especially after the cancellation of a related debate by the Democratic Party, the pressure has intensified.
Let’s listen to the morning meeting statement:
[Han Dong-hoon / People Power Party Leader: I propose once again to debate on the issue of financial investment income tax, as the Democratic Party of Korea seems to be wavering on their stance regarding this issue. This is a very important issue and the time to address it is now, as any further delay will cause significant damage to the people. Although the Democratic Party is trying to frame this issue in terms of a tax on the rich or dividing rich and poor, we do not agree with such division. We want to point out that such claims are incorrect and wish to examine the issue more precisely.]
In response to questions during a 100-day press conference, Democratic Party Floor Leader Park Chan-dae mentioned that there would be a time to gather and announce their position soon, but criticized the notion of blaming the stock market’s difficulties or global economic challenges on the yet-to-be-implemented financial investment tax as a typical evasive response.
Let’s hear what he said:
[Park Chan-dae / Democratic Party Floor Leader: I find it inappropriate for a responsible government party representative to attack as if the difficulties in the stock market or the challenges of the global economy are caused by the not-yet-implemented financial investment tax. Blaming the woes of the stock market on the financial investment tax before its implementation seems rather unjust. It appears to reflect the habit of blaming others, typical of Han Dong-hoon, rather than presenting a responsible statement as a representative of the ruling party.]
Nevertheless, internal opinions within the party remain divided.
Policy Planning Committee Chairman Jin Sung-jun continues to hold a firm stance. Different from presidential candidate Lee Jae-myung, who had delivered messages of postponement or relaxation regarding the implementation of the financial investment tax, Jin Sung-jun expressed a different standpoint, suggesting that rational discussions may lead to changes.
[Jin Sung-jun / Democratic Party Policy Planning Committee Chairman: I strongly believe that even with minor adjustments, the financial investment tax should be implemented as planned. I think Lee Jae-myung’s suggestion to raise the deduction limit from 50 million won to 100 million won was not made after thorough consideration or judgment. I believe he made such a statement based on whether opposing opinions towards the introduction of the financial investment tax may soften if the deduction limit is increased by one or two times, considering that you are also an investor in stocks. Because Lee Jae-myung is a reasonable person, rather than insisting on your statement, taking into account various internal opinions, and gathering rational thoughts, a decision will eventually be made. If such a consensus is reached, the leader will follow suit. That’s what I believe.]
With the focus of individual investors shifting towards the abolition of the financial investment tax amidst the sharp rise and fall in stock prices, attention is drawn to how the ruling party and the opposition will find common ground on this issue.
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