Value-up should proceed as planned despite DP's election victory: FSS chief

Finance

Published: 15 Apr. 2024, 18:03

Value-up should proceed as planned despite DP's election victory: FSS chief

Financial Supervisory Service Gov. Lee Bok-hyun speaks during a conference on financial market enhancement held in central Seoul on Monday, hosted by the Korea Chamber of Commerce and Industry (KCCI). [KCCI]

Financial Supervisory Service (FSS) Gov. Lee Bok-hyun has said that the "Korea Value-up Index" program, aimed at driving up undervalued domestic stock prices, should proceed as planned regardless of the election result.

The chief of Korea's financial watchdog also suggested that public opinion should be taken into account regarding the cancellation of the upcoming capital gains tax, hinting that the government should consider following through — as suggested by President Yoon Suk Yeol in January — despite control of the National Assembly remaining with the liberal Democratic Party (DP) following its landslide victory in the April 10 general election.

The comment was made on Monday during Lee’s meeting with the press in central Seoul after attending a conference on the financial sector hosted by the Korea Chamber of Commerce and Industry.

Lee said that the government’s initiatives to boost the domestic financial market, including the value-up program, “should not be considered a one-time policy” that can be swayed by an election result, but rather a long-term strategy to ensure lasting growth.

“I believe there will be no opposition to enhancing the domestic financial market,” Lee added.

Addressing a question on whether the government will continue its push to scrap the capital gains tax despite the election results, Lee noted, “I understand that there is a reluctance to further benefit those who have significant wealth,” but added, “If retail investors agree [that the capital gains tax should be scrapped], I think that the relevant stakeholders should take such opinions into account."

In January, President Yoon pledged to abolish the capital gains tax, but the plan faces a potential roadblock in the incoming DP-controlled parliament. The proposed capital gains tax — first introduced by former President Moon Jae-in, who was previously affiliated with the DP — was scheduled to take effect in 2025. Under the proposed plan, retail investors would owe 20 to 25 percent on gains from domestic stock trading valued above 50 million won ($36,127).

Lee further added, “I believe that there needs to be a public discussion on how capital gains obtained through the financial market should be taxed in a fair, efficient manner.”

There will be a town hall meeting to discuss the capital gains tax and the value-up program with retail investors in April, according to the FSS chief.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]