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Finance minister offers to resign
Deputy Prime Minister and Finance Minister Hong Nam-ki looks at documents inside the National Assembly building on Yeouido, Seoul, Oct. 3 Yonhap
By Lee Kyung-min
Gov't struggle continues over 'major shareholder'
By Lee Kyung-min
Deputy Prime Minister and Finance Minister Hong Nam-ki offered to resign Tuesday, in apparent frustration at attempts to hamper the ministry's move to impose a heavier tax on financial investment gains and the owners of multiple homes. President Moon Jae-in refused to accept the resignation.
The move was seen as part of rising criticism that Cheong Wa Dae is micromanaging government policies, reducing ministers to “mere briefers” on related policies while dismissing their opinion in the decision-making process.
The offer came amid the ministry's weeks-long efforts to seek the middle ground on a revision of taxes on capital gains, and stock and real estate transactions, so as to not completely cave in to political parties playing to their voter bases ahead of by-elections next year.
The Ministry of Economy and Finance reportedly wants to raise the minimum combined value of shares held by individual retail investors subject to capital gains tax to 500 million won ($440,000), up from 300 million won decided on more than two years ago and set to take effect Jan. 1, 2021.
The move was to counter a revision put forward by the ruling Democratic Party of Korea (DPK) which seeks to have enforcement delayed by two years.
It remains to be seen how much of a change will be made to the original plan in which the amount had been already lowered to 300 million won from 1 billion won.
A bill pending at the National Assembly seeks to raise the amount back to 1 billion won, a move spearheaded by Rep. Choo Kyung-ho of the main opposition People Power Party and supported by 16 other party members. Choo, the former vice minister of the ministry, seeks to have the revision take effect April 1.
The bill also seeks to have the minimum taxable amount of gains defined by the total value of shares held by “one shareholder or investor.”
This will be possible after removing clauses whereby the amount is determined by the value of shares held by an investor's immediate family members, as well as grandparents or grandchildren, combined.
The issue seeking higher tax on financial investments is gaining force amid the growing presence of individual retail investors in the investment market, driven by a near-zero central bank rate that pushed borrowing to a record high.
Many young people have been seeking capital gains from stock investments, as government policy is becoming tighter on real estate speculation.
The ministry's measure to raise the minimum deductible amount subject to 20 percent capital gains was raised to 50 million won ($43,774) from 20 million won, in July, after a major pushback from retail investors.
The ministry has long maintained that making changes to a revision already settled will hamper policy consistency and create further confusion in the market.
But there is speculation that a continued disregard for the minister's recommendation over the past few weeks coupled with July's abrupt revision posed a major setback to the ministry, leaving top policymaker with little choice.
The pressure against Hong has been increasing as indicated by a petition on the presidential office website seeking his dismissal garnering 230,000 signatures.