South Korean President Moon Jae-in made it clear on Friday that the recent reshuffle plan in the financial tax system should not shrink the stock investment market nor discourage individual investments. He ordered the administration to make changes to the plan that imposes transfer income taxes on capital gains of more than 20 million won generated by stock investment, 22 days after the announcement of the plan sparked controversy.
President Moon said that the purpose of revamping financial taxes should be to revitalize the stock market and encourage individual investors who have served as a driving force amid the COVID-19 pandemic, adding that the role of individual investors deserves greater significance, according to South Korean presidential office Cheong Wa Dae spokesperson Kang Min-seok. The South Korean government announced on June 25 that those who invest in the domestic stock market would be mandated to pay taxes for up to 25 percent of capital gains over 20 million won a year starting from 2023. However, the plan was met with investors’ complaints and criticism that it may serve as a double tax burden unless securities transaction taxes are abolished.
In response, the government’s revision plan is expected to raise the tax base of financial investment income by adjusting the current tax-exempt cap of 20 million won. In that context, the government may have to tweak securities transaction taxes that may double tax burden if left in place. Democratic Party legislator Kim Byung-wook, the ruling party’s secretary at the National Assembly State Affairs Committee, argues that the revocation of securities transaction taxes should come before the introduction of transfer income taxes on capital gains.
Not only housing market but also stock-related policies come under criticism for stirring up confusion. After the June 17 real estate policy package was met with criticism that it made it much harder for working-class citizens to own their homes, the administration and the ruling party hurriedly devised another policy package on July 10 while President Moon came up with additional housing supply measures. Likewise, the government brought confusion to the market due to the policy package lacking a deep understanding of market trends.
Hyung-Jun Hwang firstname.lastname@example.org · Choong-Hyun Song email@example.com