Credit: Public domain.
On July 31, the Lee Jae-myung 이재명 administration unveiled its first tax proposal, to be submitted to the National Assembly 국회 in early September. The proposal reverses most of the tax cuts from the Yoon Suk-yeol 윤석열 administration, raising corporate tax by 1% on every tax bracket. The proposal also expands the child tax credit and credit card usage deductions for taxpayers making less than KRW 70m (USD 50.3k) per year, reducing the tax burden for low- and middle-income families.
Certain parts of Lee’s tax proposal have sparked a backlash from investors. The proposal would raise the securities transaction tax 증권거래세 from 0.15% to 0.2%, and lowers the eligibility threshold for transfer income tax 양도소득세 for significant shareholders from KRW 5b (USD 3.6m) for shares in a single corporation to KRW 1b (USD 720k). The proposal also lowers the tax incentives for companies to pay dividends, compared to the proposal circulated by Democratic Party Assembly Member Lee So-yeong 이소영 민주당 국회의원.
The KOSPI index dropped by 3.88% following the announcement, putting a damper on the stock rally that has been roaring since Lee took office. (See previous coverage, “Stocks Soar on Lee Election.”) In response, Democratic Party Floor Leader Kim Byeong-gi 김병기 민주당 원내대표 said the ruling party may consider revising the presidential office’s tax proposal.
