People Power Party’s Yoon Suk-yeol (left) Justice Party’s Sim Sang-jung (Yonhap)
The inheritance tax bill faced by Samsung Group’s leader Lee Jae-yong was again mentioned in the televised debate among key presidential candidates on Monday as People Power Party’s Yoon Suk-yeol and Justice Party’s Sim Sang-jung quarreled over Yoon’s pledge to abolish capital gains tax on stocks.
Sim first asked Yoon, “Do you know why the tax was introduced?”
When Yoon said no, Sim said, “The introduction of the tax stems from Samsung Lee Jae-yong’s anomalous inheritance. Lee’s family has to pay 12 trillion won in inheritance taxes for five years.”
Currently, the stock transfer income tax is levied on major shareholders with more than 1 billion won ($900,000) in total holdings.
Sim asked Yoon whether his pledge to abolish the stock transfer tax was to reduce Lee’s inheritance tax burden.
“No,” Yoon said. “There are not many cases in which major shareholders of large companies buy and sell their shares in the stock market.”
The tax was implemented in Taiwan, but as the nation’s stock price plunged, its economic minister who proposed it was replaced, Yoon said.
Yoon said South Korea’s stock market was in difficulties now, and capital gains tax makes shareholders move out of the market at the end of the year, distorting the stock market.
“It’s to protect the many ant investors because (the tax) is a fatal blow. The stock market is so difficult now that it is an inevitable measure for ordinary investors.”
The term “ant investors” refers to ordinary retail investors. Though most do not meet the threshold to pay capital gains tax on shares, they can be negatively affected by fluctuations in the stock market. The government also plans to drop the minimum ownership threshold from next year, applying the tax to all gains above 50 million won.
Candidate Yoon pledged to abolish the securities transaction tax in December last year in line with the introduction of the stock transfer tax but changed his direction to the abolition of the stock transfer tax last month.
On the same day, Lee Jae-myung, presidential candidate of the Democratic Party, also pledged to “abolish the securities transaction tax” on his Facebook account.
The move is seen to win over ant investors by differentiating Lee from Yoon, who went back on his pledge to abolish the securities transaction tax and turned to the abolition of the stock transfer tax.
By Shin Ji-hye (email@example.com