|President Yoon Suk-yeol applauds with the participants at the market opening ceremony at the Korea Exchange in Seoul on Jan. 2, 2023./ Source: Yonhap News
By AsiaToday reporter Hong Sun-mi
President Yoon Suk-yeol proposed Tuesday to scrap a new tax scheme to help promote investment in the country’s stock market, saying, “I will push to abolish the financial investment income tax, which is set to be introduced next year, to ensure the long-term co-prosperity of our people, investors and our stock markets.”
During a ceremony marking the first trading day of the year held at the Seoul office building of the Korea Exchange, Yoon said, “I will boldly abolish capital market regulations that do not conform with global standards during my term and resolve the ‘Korea discount’ to the level of global stock markets,” he said, referring to perceptions that South Korean stocks are undervalued.
This marks the first time Yoon has officially proposed to remove the scheme.
Under the new scheme, capital gains of over 50 million won (US$38,000) from stock investments will be subject to a 20 percent tax, while earnings exceeding 300 million won will be subject to a 25 percent tax.
The implementation of the new scheme was supposed to be implemented in 2023 but was postponed by two years until 2025 amid opposition from investors and financial market associations.
“We will seek to amend commercial laws to ensure that the interests of minority shareholders are properly reflected in the decision-making processes of companies’ boards,” Yoon said. “We will also expand asset management programs such as individual savings accounts (ISA) to help people manage and build their assets more easily.”
He said the government will build a thorough computer system so that the stock market can get rid of its stigma of being a “playground only for institutions and foreigners.”
“If the excessive taxation on innocent investors damages on them and disrupts the market, we should make changes to be in harmony with the market principles,” he said, stressing that he will fix the system which could cause side effects such as a stock market downturn or a departure of investors.
“The government severely punished illegal short-selling practices by a foreign investment bank last year and banned short-selling to prevent the spread of the damage,” the president said.
“Stock markets are a forum for co-prosperity where the people and businesses grow together,” he said. “It is a ladder of opportunity that helps the people accumulate wealth.”
Yoon then vowed to support the fair market through continuous communication with market participants.
The ceremony was attended by around 200 people from the financial sector, government, ruling party and the presidential office.