Kim Sang-hoon "Financial Investment Tax Implementation, Death Sentence for Stock Market"

Kukhim "Financial Investment Tax Abolition Needed for Stock Market Stabilization"
Minju, Coexistence of Implementation, Postponement, and Abolition Theories... "Collecting Opinions"

The Financial Investment Income Tax (FIIT) is set to be implemented on January 1 next year, but calls for its abolition or postponement are gaining momentum, turning it into a contentious issue between the ruling and opposition parties. The People Power Party (PPP) insists on abolishing the FIIT, while the Democratic Party is sharply divided among proponents of implementation, postponement, and abolition, and has yet to establish an official party stance.

The PPP believes that abolishing the FIIT will stabilize the domestic stock market. On the 26th, Kim Sang-hoon, the PPP Policy Committee Chair, stated on MBC Radio's 'Kim Jong-bae's Focus' that "We need to abolish the FIIT to create a foundation where 14 million domestic stock investors can trust and invest stably in the domestic stock market," adding, "Funds are already flowing offshore in anticipation of the FIIT implementation."

The FIIT is a system that taxes 20% (25% on amounts exceeding 300 million KRW) on gains exceeding 50 million KRW annually from domestic stock investments (and 2.5 million KRW for bonds, funds, derivatives, etc.). It was introduced in 2020 under the leadership of the Democratic Party but has been postponed twice.

Chair Kim emphasized, "The implementation of the FIIT is like a death sentence for the domestic stock market, and postponement is an unstable situation akin to being on a ventilator," adding, "We need to send a clear message that abolition can stabilize the domestic stock market."

He also urged the Democratic Party for a swift decision, saying, "Time is a critical variable," and "The tax authorities are likely preparing on the assumption that the FIIT will be implemented from January 1 next year. Delaying the issue in the political arena does not help the tax authorities' preparations. We need to negotiate quickly and reach a conclusion."

On the other hand, the Democratic Party has yet to finalize its party stance on the FIIT. In the past, the Democratic Party held the position that "abolishing the FIIT is essentially a tax cut for the wealthy," but currently, internal opinions range from postponement and implementation after improvements to outright abolition. The Democratic Party gathered internal opinions through a policy forum on the FIIT held on the 24th.

Jin Sung-jun, the Democratic Party Policy Committee Chair, said on the same radio program that although a clear party stance has not been established through the forum, some consensus has formed among lawmakers. He stated, "There is common agreement that the FIIT itself is not problematic, and that active measures such as improving corporate governance and protecting minority shareholder rights to revitalize our stock market are necessary," adding, "The Policy Committee is also trying to quickly formalize and promote these opinions as the party stance."

The Democratic Party is expected to gather opinions from both inside and outside the party over the next month before deciding on an official stance regarding the FIIT. Chair Jin said, "We are still in the process of forming a party stance, and it is not a situation where a conclusion can be reached quickly," adding, "With the national audit approaching, all standing committees are preparing for the audit and witness selection, so it is questionable whether a policy meeting can be held to resolve the FIIT issue under these circumstances." The previous day, Lee Hae-sik, the Secretary-General to the Party Leader, also stated, "We decided to gather opinions over about a month and hold a party meeting to determine the procedures and direction regarding the implementation or postponement of the FIIT."