Lee Eon-joo, a Supreme Council member of the Democratic Party of Korea, said on the 30th, "I will work hard to ensure that the separation of taxation on dividend income is introduced in this regular session of the National Assembly." Amid differences of opinion within the party regarding the introduction of separate taxation for dividend income, a party leadership member has supported the affirmative stance. The Democratic Party plans to intensify internal discussions on overall tax reform through its internal organization, the Special Committee on Tax Reform.
The Supreme Council member said during a Supreme Council meeting held at the National Assembly on the morning of the 30th, "I believe that the separation of taxation on dividend income will facilitate capital procurement, contributing to the advancement of capital markets and benefiting listed companies as well," noting this.
The Supreme Council member added, "The separation of taxation on dividend income was a policy promise of President Lee Jae-myung during the presidential campaign and has been emphasized multiple times since taking office."
However, the Supreme Council member emphasized that "the separation of taxation on dividend income needs to be actively pursued when determining tax rates that align with the goal of encouraging dividends in the future," and urged, "The government must keep this point in mind to ensure it aligns with the intent of the presidential election."
Under the current tax law, financial income (dividends and interest) is subject to a flat tax rate of 15.4% for amounts up to 20 million won per year. For amounts exceeding this, it is combined with comprehensive income and subject to a progressive tax rate that can reach up to 49.5%. The government is reportedly considering plans to separate taxation on dividend income and lower the upper limit. Within the party, there are divided opinions, with some stating that the separation of taxation on dividend income is a "tax cut for the wealthy" and others arguing that it is "to activate capital markets."
The Supreme Council member requested a cautious approach regarding changes to the standards for taxing stock transfer gains. He pointed out that "although nothing has been confirmed yet, lowering the large shareholder criteria from the current 5 billion won to 1 billion won has minimal revenue effects, and it is necessary to consider various factors to see if it aligns with the policy direction of the Lee Jae-myung government."
He continued, "(Changing the large shareholder criteria) could lead to unnecessary flows where individuals distribute dividends at year-end to avoid the transfer tax and repurchase at the beginning of the year, thus potentially weakening the momentum for activating the stock market," adding, "We will need to examine this carefully during the party's tax reform discussions."
The Democratic Party completed the formation of the Special Committee on Tax Reform to discuss the overall tax reform plan on this day. Three-term lawmaker Kim Young-jin was appointed as the special committee chair, and Jeong Tae-ho, who serves as the ruling party's secretary for the Ministry of Economy and Finance in the National Assembly, was appointed as the special committee secretary. Joining as commissioners are lawmakers Oh Gi-hyung, Choi Ki-sang, Kim Young-hwan, and Ahn Do-geol from the Strategy and Finance Committee, along with Park Jeong-hyeon from the Public Administration and Security Committee, Song Jae-bong from the Trade, Industry, Energy, SMEs, and Startups Committee, and Jeon Jin-suk from the Health and Welfare Committee.
Park Sang-hyeok, the Democratic Party's chief spokesperson, met with reporters after the meeting, stating, "The special committee will gather various opinions from within the party while also proceeding with consultations for the normalization of taxes with the government," and added, "We will actively implement various normalization measures to fill the revenue shortfall left by the Yoon Suk-yeol administration."