[NEWS ANALYSIS] Rival parties tussle over inheritance tax reform as possible election looms

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[NEWS ANALYSIS] Rival parties tussle over inheritance tax reform as possible election looms

Published: 02 Mar. 2025, 18:17 Updated: 03 Mar. 2025, 03:12

MICHAEL LEE
[email protected]

Audio report: written by reporters, read by AI

People Power Party floor leader Rep. Kweon Seong-dong speaks at the National Assembly in Yeouido, western Seoul, on Feb. 27. [NEWS1]

Partisan mudslinging over inheritance tax reform is heating up as the country's main parties jockey to position themselves as proponents of lower death duties.

Officials from both the conservative People Power Party (PPP) and liberal Democratic Party (DP) have recently suggested reducing inheritance taxes ahead of the early presidential election that would take place if the Constitutional Court upholds President Yoon Suk Yeol’s impeachment.

DP leader Lee Jae-myung recently revived a proposal from his own party to raise the maximum deductible amount on death duties from 500 million won ($342,000) to 800 million won for a deceased person’s heirs and 500 million won to 1 billion won for surviving spouses.

However, the PPP has countered the DP leader’s plan by proposing lower inheritance tax rates across the board, and not just raising deductions.

In a post uploaded to his official Facebook account on Sunday, PPP floor leader Kweon Seong-dong accused Lee and the DP of calling for a higher cap on inheritance tax deductions “solely” to gain an edge politically.

Kweon claimed the DP was trying “to placate an enraged middle class” by increasing deductions “while maintaining a punitively high maximum rate to maintain support from its left-wing base.”

In a Gallup Korea survey released on Feb. 28, 52 percent of respondents said that the country’s inheritance tax rates should be lower, with 69 percent agreeing that the maximum rate should be brought down from the current 50 percent to 40 percent.

Kweon cited the survey as proof that the DP was wrong to shelve a bill submitted last year by one of its own members to lower inheritance taxes.

The PPP floor leader noted that the maximum deductible amount for death duties has remained unchanged since being fixed in 1997 despite inflation and a near-tripling of the country’s GDP per capita.

According to Kweon, the result is that “the burden of inheritance tax now not only falls on the wealthy, but also the middle class,” leading to cases “where people have to sell their houses to pay death duties.”

The PPP floor leader also called for lower inheritance taxes on business owners, arguing that the current top rate “prevents the emergence of long-lasting companies.”

However, the DP argues that Kweon’s proposal for lower inheritance tax rates would only benefit the country’s wealthiest people.

In a statement released on Sunday, DP spokesperson Rep. Hwang Jung-ah called the PPP “a party that serves only the super rich,” noting that just 955 people paid the maximum rate of inheritance tax in 2022.

The DP spokesperson blasted the PPP for “prioritizing lower taxes above all else, even if the sky falls down and the ground collapses.”

She also accused the PPP of hypocrisy for characterizing the DP as pandering to voters, referring to the conservative party’s unfulfilled pledge to incorporate Gimpo, Gyeonggi, into Seoul just before last year’s general election.

Other critics of the PPP’s proposal to lower inheritance tax rates have noted that raising the current cap on deductions would be sufficient to prevent most Seoul residents from having to sell their homes to pay death duties.

BY MICHAEL LEE [[email protected]]