[Exclusive] Said they'd revive the stock market... Over half of ruling party members on the Planning and Finance Committee subcommittee positive about reexamining 'financial investment income tax'

On the 24th, during discussions of separate taxation of dividend income

Remarks made to the effect of 'Rather than raising the transaction tax, impose a financial investment income tax'

It was confirmed on the 26th that within the Tax Subcommittee of the National Assembly's Planning and Finance Committee, which is reviewing the government's tax reform bill, more than four of the seven Democratic Party of Korea members spoke positively about introducing the financial investment income tax. It was reported that they opposed the government and ruling party's proposed reform to introduce separate taxation of dividend income, saying that "the financial investment income tax would actually be more reasonable."

According to multiple officials, at the Tax Subcommittee meeting on the 24th, at least four of the seven ruling party members expressed negative views on separate taxation of dividend income and spoke in favor of introducing the financial investment income tax.

Until now, most ruling party lawmakers had been reluctant to publicly mention introducing the financial investment income tax. Only Rep. Kim Young-hwan, who appeared as a proponent at a party forum in August last year, had publicly advocated introducing the financial investment income tax within the subcommittee. Rep. Kim reportedly said at the Tax Subcommittee, "I am glad that lawmakers are expressing support for the financial investment income tax even now."

The argument for introducing the financial investment income tax reportedly emerged during discussions on the securities transaction tax rate and the separate taxation system for dividend income. The government plan is to raise the securities transaction tax rate on markets such as the Korea Composite Stock Price Index (KOSPI) and KOSDAQ from 0% to 0.05%, and to introduce a separate taxation system for dividend income. The majority of ruling party lawmakers apparently feel that a financial investment income tax, which taxes only gains rather than increasing the transaction tax — which is levied whether there is a profit or a loss — is more logical.

The financial investment income tax is a tax that is imposed only when an investor has a net profit after aggregating gains and losses from multiple assets such as stocks and funds. The government amended the Income Tax Act in 2020 and decided to collect the financial investment income tax from January 2023, but deferred it for two years as market conditions worsened. Last year, the political sphere concluded not to introduce the system.

The Tax Subcommittee's final adjustments regarding separate taxation of dividend income are expected to be settled at the Planning and Finance Committee's sub-subcommittee meeting on the 27th. The meeting will include the committee's ruling and opposition secretaries, Jung Tae-ho and Park Soo-young, as well as the Ministry of Economy and Finance's First Vice Minister, the Director General of Tax Policy, and senior specialist advisers from the National Assembly's Policy Committee.

The party leadership drew a line on the introduction of the financial investment income tax. A key lawmaker in the Democratic Party's parliamentary leadership said, "The Planning and Finance Committee's Tax Subcommittee discussions are meaningless," and "There are no plans to revise policy at this stage."

Reporter Haeryeon Choi haeryon@hankyung.com

Reporter Kwangsik Lee bumeran@hankyung.com