The Korea Herald


Finance Minister offers to resign over major-shareholder taxation furor

By Bae Hyunjung

Published : Nov. 3, 2020 - 17:10

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Deputy Prime Minister and Finance Minister Hong Nam-ki. (Yonhap) Deputy Prime Minister and Finance Minister Hong Nam-ki. (Yonhap)

South Korea’s Deputy Prime Minister and Finance Minister Hong Nam-ki offered his resignation on Tuesday, in an apparent response to the market backlash against the government’s proposed changes to the taxation rules.

“I have offered my resignation and submitted my letter today, taking responsibility over the prolonged disputes,” the fiscal chief said during a parliamentary finance committee meeting.

His abrupt announcement came while answering a question from Rep. Chung Il-young of the ruling Democratic Party of Korea, concerning the Ministry of Economy and Finance’s continued attempts to redefine a “major shareholder” by lowering the threshold.

Under the current financial rules, those who own shares in a corporation worth more than 1 billion won ($881,135) are considered major shareholders and are thus subject to a transfer tax rate of 22 percent to 33 percent.

The government’s proposal to lower the standard to 300 million won has faced fierce resistance, not only from retail investors but also from the ruling party.

In a compromise, the ministry recently said it was considering charging stock transfer taxes based on the value of stocks held by individuals, not the aggregated holdings of households.

But due to continued complaints, Hong said the given standard is to be “maintained at the current 1 billion won” and said he would step down from his post.

However, President Moon Jae-in rejected the fiscal policymaker’s resignation.

“Minister Hong offered his resignation to the president after the Cabinet meeting (this morning), but the president immediately rejected it,” said Cheong Wa Dae spokesperson Kang Min-seok.