Ruling Party to Heavily Revise Government Plans on Real Estate Taxes, Stock Price Suppression Prevention Act and ISA

[Financial News] The DPK signaled on the 9th that it would move to substantially revise the government’s real estate tax plan, the Stock Price Suppression Prevention Act and the reform plan for the Individual Savings Account (ISA).
Han Jeoung-ae, the DPK's policy chief, held a press briefing on current issues at the National Assembly that day and raised the possibility of revising the government's tax reform plan.
Han said, "Various stakeholders are voicing their opinions on the government's tax reform plan," adding, "By gathering those views, the party and the government may coordinate and finalize the plan before the National Assembly briefing at the end of August." The party's policy chief has now openly left room for changes to the government plan.
The main revision targets Han mentioned that day were the real estate tax, which is closely tied to public sentiment in the Seoul metropolitan area, as well as the Stock Price Suppression Prevention Act and ISA.
First, the DPK plans to expand and reorganize its current Housing Market Stabilization Task Force (TF) to gather more opinions. The revamped TF will include the floor leadership, along with secretaries from the relevant standing committees in the National Assembly, including the Land, Infrastructure and Transport Committee, the National Policy Committee and the Strategy and Finance Committee, as well as lawmakers from Seoul Metropolitan Government constituencies. It will review the overall policy package, including real estate taxes. The TF is expected to hold its first meeting as early as the 12th and receive briefings from the relevant government ministries.
Han also drew a line on the so-called "Bus House" supply idea, which was recently proposed by DPK lawmaker Hwang Hee and sparked controversy among young people and the opposition, saying it has "almost no chance of being realized."
He said, "We are truly sorry and apologize for unintentionally hurting young people with the Bus House idea," adding, "The party takes the housing situation facing young people very seriously and is doing its utmost to find ways to speed up supply in various forms."
Along with real estate taxes, the Stock Price Suppression Prevention Act and cuts to ISA benefits have become another source of controversy since the tax reform plan was unveiled. In particular, with President Lee Jae Myung personally ordering a full review of the Stock Price Suppression Prevention Act and the ISA benefit cuts and rebuking the Ministry of Economy and Finance, the party's follow-up response has become increasingly important.
Han argued that the government's version of the Stock Price Suppression Prevention Act differs greatly from what the party wanted.
Under the government plan, companies would be deemed to have engaged in stock price suppression if they had harmed corporate value through practices such as dual listings or the issuance of exchangeable bonds (EBs) over the past year, or if their price-to-book ratio (P/B ratio) ranked in the bottom tier for 12 of the past 13 half-year periods, specifically the bottom 25% on KOSPI and the bottom 10% on KOSDAQ. The DPK says the government's criteria for presuming stock price suppression are far looser than the party's original benchmark of a P/B ratio below 0.8, and it fears the system will lose its effectiveness.
Han said, "Even among lawmakers, some think what the government submitted is a little different from what was initially expected, so they may introduce additional bills," adding, "During the passage of budget-related bills in December, various bills will be consolidated and adjusted."
He added, "The party and the government will coordinate well so that people and market participants looking at South Korea's capital market do not feel that it is drifting in a strange direction away from the original goal."
Criticism has also been mounting among investors after the government proposed creating a Productive Finance ISA while reducing the benefits of existing ISAs. In particular, concerns have grown as the reform plan includes fewer tax-saving benefits and the abolition of carryover for contribution limits.
In response, Han said, "There is no need to touch the existing ISA," adding, "An additional Productive Finance ISA can simply be introduced as an optional choice alongside the existing ISA."
On the fallout from the tax reform plan, Han said, "We had been discussing these issues with the Ministry of Economy and Finance, and the ministry had also been moving toward taking the party's demands into account and making adjustments. President Lee Jae Myung raised the same issue, so I think the ministry will clarify its position a little faster."
[email protected] Kim Hyeong-gu Reporter