Jin Sung-jun, chairman of the policy committee of the Democratic Party of Korea, argued that there should be a cautious approach regarding the separate taxation of dividend income, which led to a decrease in the rise of representative dividend sectors such as banking, securities, and insurance.
KB Financial's stock traded at 118,600 won in the KOSPI market at 10:17 a.m. on the 25th. Although the stock price rose by 1.19% (1,400 won) compared to the previous day, it dropped more than 6% from the day's peak of 126,600 won. Hana Financial Group, Woori Financial Group, and Shinhan Financial Group also saw their uptrend ease from the early market.
Mirae Asset Securities, Korea Investment Holdings, and other securities sectors, as well as Samsung Life Insurance and Samsung Fire & Marine Insurance, are showing a trend of decreasing stock price movements from early trading. Some stocks even transitioned to a downward turn.
The background for the rising stock prices of dividend stocks, including the financial sector, is attributed to the separate taxation of dividend income, which is interpreted as influenced by the cautious stance raised within the ruling Democratic Party of Korea.
Chairman Jin stated in a statement that "1 out of 100 stock investors takes 70% of the total dividend income" and that "the reform of the dividend taxation system should be approached cautiously." He added that "if not designed carefully, only a small number of stock tycoons will benefit, while the majority of individual investors will not get any significant benefits."
Under current law, financial income such as dividends and interest is taxed at a rate of 15.4% only on amounts up to 20 million won per year. In contrast, amounts exceeding 20 million won are subject to comprehensive taxation with a maximum progressive rate of 49.5%. The government is reviewing a plan to tax dividend income at a lower rate, separating it from general income in the first tax reform proposal of the Lee Jae-myung administration.