Democratic Party Decides to Abolish Financial Investment Tax... Lee Jae-myung Says "Must Consider 15 Million Investors"

Lee Jae-myung "Government and ruling party turn financial investment tax into political dispute"
Han Dong-hoon "Welcome Democratic Party's decision... Politics at work"
Ruling and opposition parties agree on need to improve stock market structure issues

The Democratic Party of Korea has put an end to the debate over the financial investment income tax (금투세) by agreeing to the government and ruling party's proposal to abolish it. Lee Jae-myung, the leader of the Democratic Party, announced plans to pursue improvements addressing structural issues in the domestic stock market, including amendments to the Commercial Act. The People Power Party welcomed the Democratic Party's decision and expressed agreement on the need to improve structural problems in the stock market.

Lee Jae-myung, leader of the Democratic Party of Korea, is speaking at the Supreme Council meeting held at the National Assembly on the 4th. Photo by Kim Hyun-min

At the Supreme Council meeting held at the National Assembly in Yeouido, Seoul, on the 4th, Lee said, "In principle, it would be right to enforce the financial investment income tax even if it involves pain, but the current domestic stock market is too difficult, and we cannot ignore the position of the 15 million stock investors who rely on the stock market." He added, "Regrettably, we have decided to agree to the abolition of the financial investment income tax pushed by the government and ruling party."

Lee cited the politicization of the financial investment income tax as the reason for deciding to abolish it. This is interpreted as removing obstacles such as the tax in his bid for the presidency. He said, "Due to military tensions as a divided nation, the Korea discount has become normalized, but the government and ruling party are doing nothing to amend the Commercial Act for improving corporate governance." He also emphasized, "The government and ruling party are using the financial investment income tax as a political tool to attack the opposition. If they say they will postpone or implement it after improvements, it will continuously become a subject of political conflict."

Lee expressed his intention to promote measures to improve the stock market structure. In July, the Democratic Party's Policy Committee proposed the 'Korea Boost-Up Project' as a value-up measure, which includes expanding directors' fiduciary duties, mandating the appointment of independent directors, and implementing a cumulative voting system for large corporations. Lee said, "The Democratic Party will devote all efforts to legislative amendments, including the Commercial Act, and policies to advance the stock market so that the stock market can recover normally and become a means of corporate financing and public investment." He added, "We will start by implementing the amendment to the Commercial Act that expands directors' fiduciary duties to shareholders within this regular session of the National Assembly."

In July, when Lee announced his candidacy for party leader, he mentioned the need to postpone the financial investment income tax. Since then, the Democratic Party has been embroiled in debates over the tax. On September 24, the party held a forum divided into a tax postponement team and an implementation team but failed to reach a conclusion. The tax postponement team, including Democratic Party lawmaker Lee So-young, argued that "the financial investment income tax dampens the investment enthusiasm of ordinary investors." On the other hand, the implementation team, including Democratic Party lawmaker Kim Seong-hwan, countered, "If the tax is postponed, stock price manipulation groups will run rampant." Ultimately, the Democratic Party decided to delegate the party's stance on the financial investment income tax to the party leadership after holding a party members' meeting.

Even before the decision to abolish the financial investment income tax, debates occurred among the party leadership. Han Min-soo, spokesperson for the Democratic Party, told reporters after the Supreme Council meeting that day, "After the outdoor rally on the 2nd, there was a closed-door meeting within the party. Leader Lee and the Supreme Council members conducted long discussions and deliberations. Leader Lee gathered all opinions and made the decision."

Handonghun, leader of the People Power Party, is speaking at the Supreme Council meeting held at the National Assembly on the 4th. Photo by Kim Hyunmin

The ruling party expressed a welcoming stance toward Lee's decision. Han Dong-hoon, leader of the People Power Party, told reporters after the Supreme Council meeting held at the National Assembly in Yeouido, Seoul, "The abolition of the financial investment income tax is one of the livelihood policies that the People Power Party has persistently advocated since summer." He added, "Although late, we welcome the Democratic Party's decision to join in the complete abolition of the tax." He continued, "We also did our best, and it seems the Democratic Party made a reasonable judgment, so I think politics has worked after a long time." He emphasized, "We must also implement multifaceted policies to value-up the capital market and attract investors to the domestic market."