Gov't moves to cut inheritance tax

Deputy Prime Minister and Finance Minister Choo Kyung-ho speaks during the Special Committee on Budget and Accounts at the National Assembly in Yeouido, Seoul, Nov. 10. Yonhap

The government is moving to lower the inheritance tax, as indicated by the country’s top financial policymaker, according to market watchers. However, attempts to ease capital gains tax requirements for large shareholders are failing, as public support wanes for the ruling party and the government ahead of the general election in April next year.

Proponents of the inheritance tax code revision demand the maximum rate of 60 percent be lowered, since bequeathable assets are subject to double taxation. Some wealthy people say the ceiling for what the government has defined as “large shareholders” subject to the capital gains tax should be raised from the current 1 billion won ($757,288) to at least 5 billion won. They say the outdated figure fails to factor in the rising value in their securities over the past few years.

However, others say the revisions for “the haves” are barely a priority for the vast majority of voters, most of whom are reeling from soaring prices of goods, living expenses and borrowing costs.

The years-long revision push seemed to pick up steam last week after Deputy Prime Minister and Finance Minister Choo Kyung-ho told a National Assembly special committee that “It is time that the maximum rate for inheritance tax came under review.”

“Korea has the highest inheritance tax rate among Organization for Economic Cooperation and Development (OECD) member nations, 14 of which have no inheritance tax at all,” he said during the meeting of the Special Committee on Budget and Accounts, Nov. 10.

The OECD inheritance tax averages 26 percent. Korea, he said, needs to lower the current figure but it is hard to broach the issue due to its political and social divisiveness.

“Inheritance tax has double taxation concerns, but the issue faces a backlash mostly due to the public’s resistance to the transfer of wealth. The government will discuss the issue if the National Assembly puts forth revision bills," he said.

The series of comments added to expectations that the government would raise the ceiling for the large shareholders, but the finance minister said early Sunday that discussions have not been proceeding.

“The easing of the requirements needs consultation with the main opposition party. Nothing has been determined yet,” he said during a radio interview with KBS, a local broadcaster.

Rival parties, he added, agreed last year to postpone taxation on stock gains for two years, and to maintain the 1 billion won ceiling through next year.

“We are collecting the opinions of the market participants," he said. "Any changes in the status quo will need bipartisan discussion.”