Democratic Party eventually agrees to abolish financial investment income tax

Democratic Party of Korea leader Lee Jae-myung expressed his support for abolishing the financial investment income tax, which was scheduled to be introduced in January next year. “We cannot ignore the stance of 15 million stock investors. We have decided to agree to abolish the financial investment income tax, which has been pushed by the government and ruling party,” Lee stated during the party's Supreme Council meeting. Since Lee initially raised the possibility of suspending the financial investment income tax at the Democratic Party’s national convention in August, discussions over its implementation, suspension, and abolition have been ongoing within the Democratic Party for nearly three months. Ultimately, Lee opted to support abolishing the tax as part of his recent shift to the right. In response, the People Power Party said it was “better late than never” and announced they would pass a bill to abolish the financial investment income tax this month.

“We considered several options, such as raising the tax exemption limit from 50 million won to 100 million won, but concluded that this would not address the structural risks and vulnerabilities in the current stock market,” Lee said, adding, “In line with our principles and values, we should proceed with it, but the Korean stock market is currently facing significant challenges.”

“I painfully accept the criticism from the reform and progressive camp that we have abandoned our principles and values,” Lee said, referring to the party's reversal of its stance on the tax. Instead, Lee aimed to address the aftermath of the tax abolition by pledging to push the Commercial Act Amendment Bill, long advocated by the opposition, through the regular parliamentary session. “Within the regular session, we will implement measures to improve the clause in the Commercial Act that stipulates directors' duty of loyalty to shareholders, which currently allows for 'leaving out the core,'” Lee stated. The proposed amendments to the Commercial Act, which would strengthen directors' responsibilities to shareholders, are expected to be controversial due to opposition from the business community.

“The Democratic Party has made a reasonable decision regarding the financial investment income tax,” said People Power Party leader Han Dong-hoon. “It’s the first time in a long time that politics has worked.” Choo Kyung-ho, floor leader of the ruling party, stated that they would immediately begin negotiations to abolish the financial investment income tax in the November plenary session.


윤다빈 기자 empty@donga.com