President Lee: "Stock transaction and capital gains taxes will have to be reformed at some point"...Considering incentives for long-term holdings by small shareholders

[Financial News] President Lee Jae-myung stated on the 9th, in relation to the current framework for stock transaction tax and capital gains tax, "At some point, we will probably need to adjust the transaction tax and the capital gains tax to be at a similar level."
During the discussion at the first plenary session of the National Economic Advisory Council held at the main building of Cheong Wa Dae, the president noted, "We have in effect reinstated the transaction tax, but the problem is that you have to pay it whether you make a profit or a loss." He went on to say, "We need to shift from the transaction tax to capital gains taxation," adding, "Those who make money should pay, and those who do not should not. Right now, even people who do not make money are paying, so the system is regressive."
His remarks came as participants discussed ways to revitalize the capital market and encourage long-term investment. Lee Jae-myung said, "We need to introduce an incentive scheme for long-term holdings, but there is a high risk that the benefits will be concentrated among controlling shareholders who exercise management rights." He added, "It may be worth considering limiting such incentives to small shareholders only."
He also commented, "Providing tax benefits for long-term holdings is one of the options we are reviewing," while pointing out that "capital gains on stock are currently close to zero, so there is hardly any leverage in the system."
Earlier, Dong-hwan Kim, an advisor on the Growth Economy Subcommittee, noted that the tax treatment of dividend income and interest income is the same, and proposed introducing temporary tax-advantaged products for small investors. In response, the president said, "That is a valid point," and indicated that the government could examine incentives for long-term holdings together with benefits targeted at small shareholders.
At the meeting, Lee Jae-myung also said, "Capital is locked up in unproductive areas, most notably the real estate market, and shifting it into productive sectors is the top priority for this administration." He stressed that fostering the capital market and increasing citizens' dividend income could help with retirement planning and supplementing living expenses.
west@fnnews.com Reporter Seong Seok-woo Reporter