The People Power Party announced on the 6th that it will completely abolish the spouse inheritance tax and push for a reform of the inheritance tax by changing the current 'inheritance tax' to 'inheritance acquisition tax.' As the possibility of an early presidential election has increased due to the Constitutional Court's impeachment trial of the president, the inheritance tax debate in the political arena is expected to heat up.
Chairperson Kwon Young-se said in a meeting of the emergency response committee on the morning of the same day, "We need to eliminate the punitive nature of the inheritance tax," adding, "The key is the complete abolition of the spouse inheritance tax and a tax system based on the amount inherited."
He stated, "We will completely abolish the spouse inheritance tax," and noted, "Inheritance among spouses who have built wealth together is not a transfer of wealth between generations. Most developed countries, including the United States, the United Kingdom, and France, do not tax spouse inheritance."
He also said, "We will change the current inheritance tax system to an inheritance acquisition tax system so that heirs only pay taxes on the amount they actually inherit." Chairperson Kwon added, "This method is adopted by 20 countries among the Organisation for Economic Co-operation and Development (OECD) and enables fairer and more reasonable taxation."
The current inheritance tax imposes taxes on the total inherited assets. The proposal is to change it to a system where taxes are paid only on the amount inherited, rather than the entire estate. Currently, inheritance tax applies the inheritance tax system, while gift tax applies the inheritance acquisition tax method. The presidential office and government have also been pushing for the transition to inheritance acquisition tax; however, the ruling party has refrained from making a position statement until now.
Chairperson Kwon commented, "Reforming the inheritance tax is a demand from the people. According to opinion polls, 52% of the public responded that the inheritance tax should be lowered, and 7 out of 10 people support adjusting the highest inheritance tax rate from the current 50% to 40%," adding, "The political sphere must respond to such public demands."
He further emphasized, "The People Power Party has prepared the inheritance tax reform plan with the determination to correct long-standing injustices and protect families' futures," noting, "The fundamental principle of the reform is to align it with global standards. Ten countries among the OECD have abolished inheritance taxes, while others have reduced the highest tax rates and increased exemptions. Our country must also align with this trend."
He criticized the Democratic Party's inheritance tax reform proposal as "a fake for incitement."
Chairperson Kwon pointed out, "The Democratic Party's inheritance tax reform proposal still maintains a punitive nature that imposes excessive tax burdens and is trapped in outdated patriarchal thinking."
He claimed, "The Democratic Party's interest is not in a genuine reform of the inheritance tax, but solely in creating a propaganda slogan that Representative Lee Jae-myung has reduced taxes." He added, "The People Power Party will definitely stop the Democratic Party's fake reform proposal and complete a true inheritance tax reform. We will protect the property rights that the people have worked hard for and secure a stable future for families with proper reform."
Both ruling and opposition parties agree on relaxing inheritance tax exemptions. The Democratic Party is currently pursuing a plan to increase the lump-sum and spouse exemption minimum from the current 1 billion won (500 million won, 500 million won) to 1.8 billion won (800 million won, 1 billion won). The People Power Party, on the other hand, believes that not only individual exemption limits should be expanded, but also that business succession exemptions should be lowered to maintain corporate competitiveness. The policy is to lower the highest tax rate from the current 50% to 40%, leading to a deadlock in negotiations. In this context, they have countered the Democratic Party's plan to 'expand spouse exemption limits' with a proposal for the complete abolition of the spouse inheritance tax.