Financial regulator pledges to scrap planned capital gains tax on investments
Kim So-young, right, vice chairman of the Financial Services Commission, speaks during a seminar in Seoul, Jan. 3. Yonhap
The financial regulator said Wednesday it will work to scrap a planned capital gains tax on investments while cutting a tax on stock transactions to 0.15 percent by 2025.
The Financial Services Commission (FSC) also said it will work to expand the wealth of ordinary citizens and help reduce their financial burdens as part of its policy objectives this year that include more than 210 trillion won ($157 billion) in financial support.
President Yoon Suk Yeol has said he would abolish the planned tax on financial investments, which is set to be implemented at the start of next year.
The stock exchange tax has been on the decline from 0.25 percent in 2020 to 0.23 percent in 2021 and then to 0.20 percent last year.
"The government has made various efforts to help improve the lives of our people through finance. However, there are areas where such efforts need to be further expanded based on the progress made so far," FSC Vice Chairman Kim So-young told a press briefing Tuesday.
"From now on, the government will work to make sure that our country's financial market becomes a ladder of opportunity that helps elevate the people," he added.
To this end, the financial regulator will create a "level playing field" in the stock market, the FSC vice chief said, citing the ongoing work to overhaul the stock short selling system.
A temporary ban on short selling has been in place since late last year and is expected to remain effective at least until the end of June, while the financial authorities work to create a new system that will prevent any illegal naked stock short selling.
The FSC said it will also seek to diversify and strengthen penalties for illegal stock short selling, which may include restricting those found guilty from the stock market for up to 10 years, to create what it called a "fair" playing field.
The government will also seek to reduce the burden of interest on the people while limiting the rise in household debt.
To this end, the government will work with local banks and non-bank lenders to have them refund a total of 2 trillion won they have collected in interest payments, according to the FSC.
Under the proposed plan, some 1.87 million people who have taken out loans from banks may receive up to 3 million won each, while those who have borrowed money from non-bank lenders, such as credit unions and savings banks, may get up to 1.5 million won each in refunds.
The FSC will also expand its refinancing program to help people replace their existing loans with lower interest loans.
Nearly 112,000 people have already taken advantage of the program to refinance their combined 2.53 trillion-won debt in credit loans, reducing their interest rates by an average 1.6 percentage points and saving 53.9 billion won in interest payments, according to the FSC.
Over 5,600 people have also refinanced their home-backed loans, totaling 1.03 trillion won, to reduce their interest rates by an average 1.5 percentage points.
The FSC also reaffirmed its efforts to help people rebuild their credit ratings, so that they can "return to normal economic activities."
The government deleted the overdue loan repayment records of some 2.9 million people earlier this week, improving their credit scores by an average 39 points, which, in turn, will enable some 2.5 million of them to refinance their existing loans at lower interest rates. (Yonhap)