Ruling Party: "We Must Amend Comprehensive Real Estate Tax, Financial Investment Tax, and Inheritance Tax" VS Opposition: "Timing of Discussion Is Inappropriate"

People Power Party Promotes Tax Relief Theory
Democratic Party Prioritizes 'Committee Formation' Negotiations

The debate between the People Power Party and the Democratic Party of Korea over tax reform is intensifying. The People Power Party is emphasizing tax relief with a focus on people's livelihoods, while the Democratic Party, although some have mentioned revising the Comprehensive Real Estate Holding Tax (종부세), is taking a cautious approach, saying "it is not yet the right time for concrete discussions" and considering the timing carefully.

The People Power Party has proposed the abolition of the Financial Investment Income Tax (금투세) as one of its top priority bills. The Financial Investment Income Tax law, which will take effect next year, imposes a 20% tax on income exceeding certain thresholds (KRW 50 million for stocks and KRW 2.5 million for others) earned from financial investments such as stocks, bonds, and funds. The People Power Party also announced plans to discuss inheritance tax reform within the 22nd National Assembly session, mentioning measures such as converting inheritance tax to inheritance acquisition tax and adjusting inheritance tax rates. Currently, inheritance tax is based on the total inherited estate, whereas inheritance acquisition tax is based on the property acquired by the heir.

Chu Kyung-ho, Floor Leader of the People Power Party (left), and Park Chan-dae, Floor Leader of the Democratic Party of Korea (right) [Image source=Yonhap News]

The discussion on the Comprehensive Real Estate Holding Tax was sparked by the Democratic Party. Following an interview in which Park Chan-dae, the Democratic Party floor leader, mentioned a "reform of the Comprehensive Real Estate Holding Tax for primary residences," the Presidential Office responded by saying, "Basically, it is right to abolish the Comprehensive Real Estate Holding Tax," which expanded the debate. In response, Jeong Jeom-sik, the People Power Party policy committee chairman, also welcomed the move and argued that discussions related to the Comprehensive Real Estate Holding Tax should continue.

However, the Democratic Party floor leadership is somewhat distancing itself from the timing of discussions on the Comprehensive Real Estate Holding Tax. On the afternoon of the 2nd, Park told reporters, "I think there should be significant relief on the Comprehensive Real Estate Holding Tax for primary residences," but added, "There are diverse opinions within the party, so it will take time to produce a unified voice." He also stated that the formation of the 22nd National Assembly should take priority.

The leadership's cautious stance on the timing of discussions appears to be influenced by the fact that a considerable number of Democratic Party lawmakers still oppose the abolition or easing of the Comprehensive Real Estate Holding Tax. Within the party, Ko Min-jung, a Supreme Council member, expressed support for reform, saying "a comprehensive redesign is necessary," while Jin Sung-jun, the policy committee chairman, stated that he "opposes the abolition of taxes on the ultra-wealthy." It is also interpreted that the party is wary of entering discussions without internal consensus, fearing that the government and ruling party might take the lead in policy direction.