Ruling party considers task force on tax increase for ultra-rich


The ruling Grand National Party’s attention has been drawn to the possibility of a hike in capital gains taxes after its strongest presidential hopeful Rep. Park Geun-hye stressed the need for it Thursday.

Former GNP chairwoman Park said raising taxes on major shareholders’ capital gains and investment returns could help redress economic inequality.

Her comments came as the conservative party has been discussing heavier income taxes for the wealthiest, among other options, to win back public support ahead of general and presidential elections next year.

“The idea of creating an additional 40-percent income tax band has been floated. But that only deals with levying higher income taxes, which would total less than 1 trillion won ($886 million),” Park said in an interview with a local TV channel.

“In fact, there is a need to impose (higher) taxes on major shareholders’ transactions of stocks and other financial assets rather than on (incomes).”

Reformist party members have suggested that a new tax band for those who make a yearly income of 150-200 million won be created, in a shift from the party’s previous policy of tax cuts for the rich.

Through her comments, the former GNP chairwoman indicated that the party should pay more attention to taxation for those who have accumulated their wealth through unearned revenues rather than high-salaried citizens.

Some within the party warned of possible resistance from its traditional supporters of tax cuts, whose impact they claim will trickle down to the general public.

Although supporters welcomed the “egalitarian move,” those against the tax increase argue that heavier taxes could dampen local financial markets and encourage investors to seek foreign investment destinations.

The party is expected to have a heated debate over a set of taxation methods.

The GNP policy committee is considering setting up a taskforce dedicated to dealing with this issue. It also seeks to hold a general meeting of its party lawmakers as early as this week to solicit their opinions.

“Given a variety of talks over the tax increase (for the rich), time has come to conduct a comprehensive policy review of the issue,” GNP policy chief Rep. Lee Ju-young told reporters. “We will carefully look at the overall tax system in light of the two methods ― one on income taxes and the other on taxes on capital gains.”

Amid a flurry of discussions over the tax increase, Rep. Lim Hae-kyu, vice policy chief of the party, plans to submit a revision bill as early as this week.

The bill seeks heavier taxes on large gains from the transfer of securities and other financial assets while excluding small-scale investors from the taxation list.

“The basic principle is that there should be taxes imposed where there are gains, but taxes on capital gains have not been properly imposed,” Lim told the media. “As our stock market has considerably improved, we need to expand those subject to taxes on transfer gains.”

Since its defeat in the Seoul mayoral by-election in October, the GNP has been discussing measures to shake off its image as an “elitist, wealthy party” and shore up trust among ordinary citizens.

By Song Sang-ho (sshluck@heraldcorp.com)