Democratic Party Divided on Financial Investment Tax: Majority of Leadership Favors Implementation

Heated Debate Ahead of Party Discussion on the 24th
'Implementation After Supplement' VS 'Postponement' Opinions Divided
Leadership Generally Supports "Implementation in 2025"

The Democratic Party of Korea is engaged in a heated debate over the financial investment income tax (금투세) to be introduced in 2025, divided between the 'implement after supplementation' faction and the 'postponement' faction. The opinion to 'implement as is' has faded. In this regard, the Democratic Party will hold an internal forum on the 24th. Attention is focused on whether the party can unify its consensus amid clear differences in opinion.

On April 15th, dark clouds heavily covered the National Assembly building. Photo by Kim Hyun-min kimhyun81@

The party leadership and the policy committee leadership generally support the introduction of the financial investment income tax. However, they believe some supplementation is possible, such as raising the deduction limit from the current 50 million won to 100 million won or changing the tax payment method. Representative Lee Jae-myung mentioned 'postponement' last month but has since leaned toward 'implement after supplementation' by proposing a specific plan to raise the deduction limit. Floor leader Park Chan-dae also said on the 4th, "It would be better to clear up misunderstandings about the financial investment income tax and implement it after supplementation."

Policy Committee Chair Jin Sung-jun and Standing Vice Chairs Im Kwang-hyun and Ahn Do-geol also hold the position that the financial investment income tax should be implemented in 2025. Chair Jin consistently indicated the necessity of introduction, rebutting claims of private equity fund preferential treatment as "incitement" just the day before. Im, a tax expert and former Deputy Commissioner of the National Tax Service, is reportedly planning to propose a 'financial investment income tax supplementation package of six laws.' Ahn, who served as the 2nd Vice Minister of Strategy and Finance, also urged implementation based on 'asset polarization.' According to Vice Chair Ahn, only 7.7% of 'Donghak Ants'?individual investors holding more than 100 million won in listed stocks?fall into this category.

The financial investment income tax was introduced in 2020 on the premise of abolishing the securities transaction tax (excluding the special rural tax) to realize tax justice. Instead of the securities transaction tax imposed on all individual investors regardless of profit realization, the tax will be collected when profits exceed a certain level. Accordingly, the Democratic Party refers to the 'financial investment income tax' as '금투소득세' and emphasizes that it helps improve the soundness of the financial market. On the 13th, a 'financial investment income tax seminar' will also be held, hosted by Floor Leader Park Chan-dae and Policy Committee Standing Vice Chair Im Kwang-hyun.

On the other hand, Supreme Council member Lee Eon-ju and individual lawmakers Lee So-young, Lee Yeon-hee, and Jeon Yong-gi strongly advocate for postponement. At a meeting on the 9th, Supreme Council member Lee said, "I fully agree with the fundamental tax principle that taxation should be where income exists," but argued, "(The Korean market) will not be late to introduce the financial investment income tax after becoming a more attractive market." She is the only member of the party leadership to publicly express a postponement stance.

Lawmaker Lee So-young has written six blog posts about the financial investment income tax since last month. She is leading the 'postponement' discussion. On the 8th of last month, she stated, "We need to ask whether our stock market currently has the conditions and strength to be taxed," and on the 8th of this month, she pressured, "The atmosphere among some lawmakers and leadership within the party is changing. Please express your opinions publicly."

Subsequently, Lawmaker Jeon Yong-gi stated on Facebook that "the introduction of the financial investment income tax is essential," but argued that "the timing of introduction should be readjusted." Lawmaker Lee Yeon-hee also said, "Capital market advancement should come first." The forum to be held on the 24th of this month is expected to be a turning point in determining the Democratic Party's stance on the financial investment income tax.