"Tax breaks on dividend income for long-term small shareholders"

President Lee Jae-myung of South Korea on the 9th ordered a review of ways to impose a "substantial holding burden" on non-business real estate owned by companies. He also said the government would consider introducing incentives for small investors, such as separate taxation of dividend income and tax benefits for long-term holdings. The aim is to improve the structure of the stock market and encourage long-term investment.
Presiding over the first plenary session of the National Economic Advisory Council at Cheong Wa Dae (the Blue House) that day, Lee Jae-myung stated, "Capital is locked up in unproductive areas, most notably the real estate market. Shifting it from unproductive to productive sectors is the top policy goal of this administration."
During the plenary discussion, Lee Jae-myung stressed, "By any means necessary, we must make it impossible to engage in real estate speculation from now on." He added, "I am convinced that Korea's industrial and economic system will function properly only if we dismantle the structure in which people run real estate speculatively and reap profits from it."
When Woochan Kim, a professor at Korea University (KU), pointed out that "many companies also hold a large amount of non-business real estate," Lee Jae-myung responded, "Didn't we once impose sweeping regulations in the past? It seems most of them have now disappeared, so I would like the policy office to review this issue as a separate item." He went on, "For properties that companies hold in large quantities even though they are unnecessary and not immediately needed, let us review measures that would impose a substantial holding burden."
Lee Jae-myung also hinted at the possibility of expanding the scope of real estate regulations. He said, "In any case, after we deal with the current housing issue, the next stage will be farmland, and then we will extend it to general real estate. Since this topic has come up today, let us examine it in advance."
Regarding stocks, he said the government is reviewing ways to grant tax benefits to small investors who hold shares for the long term.
When Kim Dong-hwan, head of the YouTube channel Sampro TV, proposed tax incentives such as separate taxation of dividend income for small investors to promote long-term investment in the stock market, Lee Jae-myung replied, "We should look into that," calling it "a reasonable suggestion."
Lee Jae-myung said, "We are reviewing an incentive scheme for long-term holdings. Because there is a high chance that controlling shareholders who exercise management rights will capture most of the benefits, we could consider granting tax benefits for long-term holdings only to small shareholders." He added, "Ensuring that citizens can prepare for retirement or supplement their living expenses through dividend income is something we absolutely must do."
Lee Jae-myung also pointed out problems with the current tax structure, saying, "Right now, people pay the transaction tax whether they make a loss or a profit, and that is a problem. By contrast, capital gains tax on stock transfers is almost zero." He continued, "Those who make money should pay, and those who do not should not. But under the current system, even those who do not make money pay, which makes it regressive." He added, "At some point, we will probably need to bring the transaction tax and the capital gains tax to the same level."
Lee Jae-myung also instructed his aides to double the pace of state affairs. At a Senior Presidential Aides Meeting he chaired at Cheong Wa Dae that afternoon, he said, "On my way to this meeting, I realized we have only about four years and one month left to work like this." He added, "The remaining time is short, but if we double the speed of state affairs, it will be as if we had nine years and two months left."
cjk@fnnews.com Choi Jong-geun, Sung Seok-woo Reporter