'Capital gains tax should not be implemented': Finance minister holds firm

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'Capital gains tax should not be implemented': Finance minister holds firm

Published: 10 Sep. 2024, 16:04 Updated: 10 Sep. 2024, 16:05

SHIN HA-NEE
shin.hanee@joongang.co.kr

Minister of Economy and Finance Choi Sang-mok speaks during a press briefing at the Sejong government complex on Monday. [MINISTRY OF ECONOMY AND FINANCE]

The Korean government remained firm in its aim to abolish a proposed capital gains tax at a press briefing Monday, where the country's finance minister emphasized that the plan, which is set to take effect next year, has already added uncertainty to the financial market.

"I came to believe that the capital gains tax should not be implemented and that other stock market-related taxations need to be reassessed from the ground up instead,” Minister of Economy and Finance Choi Sang-mok said during the conference at the Sejong government complex.

“As many investors were left confused with the capital gains tax scheme, it has become a factor that adds to market uncertainty,” said Choi, addressing his meeting with young investors from Chungnam National University's investment club earlier that day.

“I personally became even more skeptical of whether a complementary measure would be able to reduce such uncertainties,” the minister said.

“Decisions regarding taxing capital market gains need to take into account not only tax fairness, but also capital movements between markets, whether it be between the property and capital markets or the domestic and overseas markets, along with internal and external economic situations,” Choi stressed.

Choi was pressed regarding a recent Goldman Sachs projection indicating that Korea's inclusion in the FTSE World Government Bond Index (WGBI), a major global benchmark measuring the performance of state-issued bonds, could be delayed to next year with investors continuing to report barriers to settling their trades.

The minister insisted that Korea’s market system and conditions are sufficient to meet the criteria for inclusion in the WGBI.

“Many investors agree that Korea has made progress,” said Choi. “But some also suggested that the effect of the systemic improvement should be more visible, and there was also a suggestion that [the inclusion] should proceed gradually in stages.”

Regarding sluggish domestic demand, the minister said, “While the worst of the unprecedented external and internal crises are now over, there are some lingering impacts caused by high interest rates and consumer prices.”

Choi added that "the task the government faces now is to expedite the process” of recovering domestic demand, admitting that the rebound in exports has yet to do so on its own.

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