Lim Kwanghyun Calls for Cautious Approach in Statement
Kwon Youngse Proposed, Lee Jaemyung Agreed,
But Debate May Be Prolonged
The discussion on amending the Inheritance and Gift Tax Act (IGTA), which centers on abolishing spousal inheritance tax, has hit a snag. This is because Assemblyman Lim Kwanghyun of the Democratic Party of Korea, who was expected to draft an amendment to the IGTA, has expressed a cautious stance, stating that the matter should be handled prudently. It is reported that the Democratic Party is considering abolishing the tax only within the legal share of inheritance.
On March 18, Assemblyman Lim stated, "The public is asking whether the 'unlimited abolition of the spousal inheritance deduction' bill should be drafted in just ten days," adding, "Easing the spousal inheritance deduction is a reasonable policy, but I propose that it be pursued from the taxpayer's perspective, with sufficient public opinion gathering and national consensus building."
The People Power Party (PPP) had introduced a bill to abolish the spousal inheritance tax under the IGTA the previous day, with all its lawmakers as co-sponsors. Park Sooyoung, the PPP secretary on the National Assembly's Strategy and Finance Committee, said, "The Tax Subcommittee has decided to schedule discussions once both the PPP's bill and Assemblyman Lim Kwanghyun's bill from the Democratic Party are submitted." The PPP intends to proceed with discussions on abolishing the tax once the Democratic Party presents its own bill.
However, with Assemblyman Lim adopting a cautious position, discussions on amending the IGTA are inevitably facing setbacks. Lim pointed out, "Citing fairness with property division in divorce cases, is it logically consistent to abolish the deduction without limit?" He added, "If the purpose is to recognize the spouse's contribution to asset formation during the marriage, then it would be more appropriate to set a limit."
He also emphasized the need to consider several factors: the potential infringement on children's inheritance opportunities and the resulting risk of disputes, the possibility of increased tax burdens if the surviving spouse passes away and the inheritance is transferred to the children, and the risk that the system could be exploited as a means of tax avoidance on capital gains.
Assemblyman Lim stated, "Easing the spousal inheritance deduction is a reasonable policy," adding, "We should first make minor adjustments to prevent the most urgent cases, such as middle-class families having to sell their only home due to inheritance tax. As for abolishing the spousal deduction, I propose holding public hearings, thoroughly collecting public opinion, and building national consensus to discuss which approach is more advantageous for taxpayers."
An official from Lim's office commented, "The People Power Party is proposing to abolish all legal shares of inheritance, but we are considering abolishing the limit only within the legal share."
Previously, on March 6, Kwon Youngse, acting leader of the PPP's Emergency Response Committee, stated at the committee meeting, "Reforming the inheritance tax is a public demand," and "We will completely abolish the spousal inheritance tax." He explained, "Inheritance between spouses who have built their wealth together is not an intergenerational transfer of wealth," and "Most advanced countries, including the United States, the United Kingdom, and France, do not tax spousal inheritance." The following day, on March 7, Democratic Party leader Lee Jaemyung said, "Exempting spouses from inheritance tax is a horizontal transfer of assets, and considering that property is divided in divorce, it is reasonable," adding, "Since the PPP seems to agree on raising the unified deduction amount for inheritance tax, we will also agree to abolish the spousal inheritance tax." With both party leaders expressing their intention to abolish the spousal inheritance tax, discussions on the matter had gained momentum.
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