SEOUL, Nov. 3 (Yonhap) — Finance Minister Hong Nam-ki said Tuesday the country will maintain the current stock transaction taxation base for major shareholders, citing heightened economic uncertainty.
The government has been seeking to lower the taxation threshold for a large shareholder to 300 million won (US$264,430) worth of stocks in a single company, from the current 1 billion won.
It is part of the government’s plan to levy a tax of up to 25 percent on investors who earn more than 50 million won from stock investment starting in 2023.
But the ruling Democratic Party (DP) and the finance ministry have sparred over the issue for months, as many retail investors have urged the authorities to scrap the plan, claiming that the bar is too low.
The governing party said the threshold should be maintained by another two years out of concerns over market turmoil. But the government stuck to its plan to lower the ceiling starting in April 2021 in an effort to broaden the tax base.
During a parliamentary session, Hong said the DP and the government have decided to retain the standard at the current 1 billion won, as economic uncertainties remained high.
“I’ve been opposed to the idea, as I think it is not desirable to keep the standard of (1 billion won),” Hong said.
The finance minister said he has offered to step down to take responsibility for the controversy. But the presidential office Cheong Wa Dae immediately said Moon Jae-in has rejected his offer for resignation.
Hong, Moon’s second pick for the top economic policymaker, has clashed with the ruling party over key economic policies.
Earlier this year, the minister initially opposed a proposal to provide up to 1 million won in emergency handouts to every household when the country drew up its first extra budget designed to cope with the fallout of the COVID-19 pandemic.
Hong also defended the country’s proposed new fiscal rules, citing the need to bolster financial soundness of state coffers.
Last month, South Korea unveiled the proposal that will limit its debt to 60 percent of gross domestic product (GDP) and its fiscal deficit to 3 percent starting in 2025. The new rule is subject to parliamentary approval.
The DP criticized Hong for pressing ahead with the proposed fiscal rule, saying it is time for the government to implement fiscal policy more aggressively to tackle the pandemic-caused economic slowdown.