Delayed taxation of virtual assets aims at young voters' support
The ruling and opposition parties have agreed to postpone introducing the taxation of virtual assets for one year to 2023. It seems as if the rival parties showed rare bipartisanship, conscious of voters in their 20s and 30s, in the lead-up to the presidential poll less than 100 days away. Early last month, Lee Jae-myung, the candidate of the governing Democratic Party of Korea (DPK), pledged to put off the taxation, and the main opposition People Power Party (PPP) has shown few signs of disagreement. However, the two political parties' agreement to delay the taxation just one month before its implementation cannot avoid criticism for being a populist election strategy. It's sad to watch the rerun of retreating on tax principles every election season.
About a year ago, the National Assembly passed the amendment to the Income Tax Act, which called for imposing tax on income from virtual assets ― applying a basic deduction of 2.5 million won ($2,097) and a tax rate of 20 percent. Investors in cryptocurrencies and service providers opposed the move, taking issue with equity regarding the taxation of stock investments. The political circles concurred with the protesters, citing insufficient preparation for the market. However, the government refuted such claims, saying it that it was more than ready to implement the new system, and that its postponement would amplify confusion. Officials also opposed the calls for increasing the deduction limit to 50 million won, arguing that they could not treat listed stocks and virtual assets equally.
The politicians' arguments may not be entirely unreasonable. Nor is it hard to understand how desperate today's younger generations feel as they are forced to make debt-financed investments amid dwindling incomes and skyrocketing home prices. However, consistency and trust are key to government policy. Concerns are already rising that postponing the implementation of the tax would cause a setback in policies to institutionalize virtual assets.
Delaying a system approved by the National Assembly a year ago that was scheduled for implementation a month from now for electoral purposes is little different from the political parties' self-denial. In addition, there may be few practical benefits. Late last year, the ruling party suspended measures to strengthen stock transfer taxes, conscious of the by-elections to pick the mayors of Seoul and Busan this past April. As everybody knows, it lost both mayoral elections.
The ruling and opposition parties have agreed to postpone introducing the taxation of virtual assets for one year to 2023. It seems as if the rival parties showed rare bipartisanship, conscious of voters in their 20s and 30s, in the lead-up to the presidential poll less than 100 days away. Early last month, Lee Jae-myung, the candidate of the governing Democratic Party of Korea (DPK), pledged to put off the taxation, and the main opposition People Power Party (PPP) has shown few signs of disagreement. However, the two political parties' agreement to delay the taxation just one month before its implementation cannot avoid criticism for being a populist election strategy. It's sad to watch the rerun of retreating on tax principles every election season.
About a year ago, the National Assembly passed the amendment to the Income Tax Act, which called for imposing tax on income from virtual assets ― applying a basic deduction of 2.5 million won ($2,097) and a tax rate of 20 percent. Investors in cryptocurrencies and service providers opposed the move, taking issue with equity regarding the taxation of stock investments. The political circles concurred with the protesters, citing insufficient preparation for the market. However, the government refuted such claims, saying it that it was more than ready to implement the new system, and that its postponement would amplify confusion. Officials also opposed the calls for increasing the deduction limit to 50 million won, arguing that they could not treat listed stocks and virtual assets equally.
The politicians' arguments may not be entirely unreasonable. Nor is it hard to understand how desperate today's younger generations feel as they are forced to make debt-financed investments amid dwindling incomes and skyrocketing home prices. However, consistency and trust are key to government policy. Concerns are already rising that postponing the implementation of the tax would cause a setback in policies to institutionalize virtual assets.
Delaying a system approved by the National Assembly a year ago that was scheduled for implementation a month from now for electoral purposes is little different from the political parties' self-denial. In addition, there may be few practical benefits. Late last year, the ruling party suspended measures to strengthen stock transfer taxes, conscious of the by-elections to pick the mayors of Seoul and Busan this past April. As everybody knows, it lost both mayoral elections.
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