Discussion Ignites on Introducing 'Hoengjae Tax' as Banks Achieve Record Profits

Opposition Party "Pushing for Introduction"... Ruling Party "Has Pros and Cons" Opposes
Measures to Ease Bank Monopoly Expected Within the Year

As domestic banks posted record-high profits during the interest rate hike period, discussions about a 'windfall tax' have ignited in the political arena. On the 10th, Lee Jae-myung, leader of the Democratic Party, announced plans to impose a windfall tax on banks' excess profits. He stated, "We will introduce a windfall tax on banks and oil companies that have achieved 'record-high profits.'"

Oil companies and banks are monopolistic enterprises. Due to this structure, some European countries have introduced a windfall tax on excess profits, based on the idea that additional taxes should be levied on profits deemed excessively above normal. It is a tax imposed on corporate profits considered excessively excessive.

However, the ruling party is negative about introducing a windfall tax. Kim Joo-hyun, Chairman of the Financial Services Commission, said regarding discussions on introducing a 'windfall tax' targeting banks, "There are pros and cons, so we are considering it carefully."

On the 9th, at the National Assembly's Finance and Economy Committee plenary session, in response to a question from Min Byung-duk of the Democratic Party asking, "Has a position on the windfall tax been decided?" Kim replied, "Nothing has been finalized."

When Yoon Chang-hyun of the People Power Party suggested, "Rather than taxes like a windfall tax, wouldn't it be better to have banks contribute to government financial products for low-income people, such as Sunshine Loans, from a guideline perspective?" Kim responded, "I think that's a good idea."

Kim also said, "We are reviewing various measures related to expanding banks' contributions to low-income financial services."

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho also stated during a government questioning session at the National Assembly in February, "Chasing corporate profits and demanding more payments each time by calling it windfall or not is neither consistent with market principles nor basic economic principles."

Instead, the government has decided to prepare measures to ease bank monopolies within the year. This move follows President Yoon Seok-youl's recent criticism of the monopolistic structure of banks.

The improvement plan is expected to include measures to lower market interest rates through competition among banks and to prevent low-credit individuals or young people with short social experience from being pushed into high interest rates.