The number of signatories for a national assembly petition opposing the government's tax reform plan to expand the capital gains tax on stock transfers surpassed 100,000 over the weekend. As the anger of individual investors grows, the ruling Democratic Party of Korea is also showing signs of confusion.
As of 7 p.m. on the 3rd, the 'petition against lowering the capital gains tax for major shareholders' publicly posted on the national assembly petition board received support from over 100,400 people. It was posted on the 31st of last month and surpassed 100,000 supporters in just three days. If more than 50,000 people agree within 30 days of publication, the petition is officially accepted and must be discussed in the relevant standing committee of the national assembly, after which results are announced.
The petitioner who submitted the petition pointed out that "the capital gains tax is a law that major shareholders can avoid by selling at the end of the year," stating, "If that much tax-avoiding volume comes out, the stock price will inevitably fall." He further criticized, "If NVIDIA continues to rise and the Korean stock market pays the same tax, which fool would invest in the Korean stock market?" He went on to say, "If avoiding volume pours out every year-end, the KOSPI cannot rise like in the U.S. The market will regress back to how it was before, leaving only the box market and themes."
This reform plan focuses on lowering the threshold for major shareholders subject to the capital gains tax from the current 5 billion won to 1 billion won. There are claims that if the number of taxpayers surges and more 'big hands' leave the domestic stock market, it could ultimately trigger a decline in stock prices. On the day after the announcement of the reform plan, on the 1st, the KOSPI plummeted by 3.88% (126.03 points), closing at 3,119.41, marking the largest drop in four months since April 7.
As investor backlash intensified, Kim Byung-ki, the acting leader of the Democratic Party of Korea, noted that the government's announcement could be reconsidered. However, Jin Sung-jun, the policy chief of the Democratic Party of Korea, stated on the 2nd, "Many investors and experts say that if the requirements for the capital gains tax on stock transfers are reversed, our stock market will collapse, but the precedent does not support that." He added, "This is all a measure to restore the revenue base damaged by the Yoon Suk-yeol administration."