Main S Korea’s Presidential Candidates Oppose Crypto Tax – But Gov’t Won’t Budge
The long-running will-they-won’t-they saga of the South Korean government’s crypto tax plans has taken a fresh turn – after both of the leading candidates to become the next President in March 2022 said they were in favor of delaying or amending the tax.
As previously reported, the issue is thorny: The tax was already been voted into law and is slated to come into force on January 1, 2022. South Korea goes to the polls on March 9, where one of Lee Jae-myung, the nominee of the Democratic Party, and the newly confirmed main opposition candidate Yoon Seok-yeol will almost certainly be elected.
The new law requires crypto trading profits over an annual total of USD 2,100 to be taxed at 20% under revised capital gains tax provisions. The National Assembly has already signed off on the law, although it was bundled with other legal amendments at the time. However, it has since proved extremely unpopular with younger Koreans in the “2030 generation” – city-dwellers aged 20-39, who have sunk much of their savings into crypto investments in the past year or so. Petitions aimed at changing the government’s mind on the issue have thus far fallen on deaf ears.
Last week, media reports noted that the major parties were becoming increasingly “conscious of the voting behavior” of the 2030s, and quoted political analysts as opining that “the government will eventually raise the white flag” on crypto tax.
This appears not to be the case so far: On November 8, the Minister of Finance and incumbent Deputy Prime Minister Hong Nam-ki once again dug his heels in on the issue, telling a budget-related special committee at the National Assembly that crypto profits “should be taxed as per the agreed schedule,” EDaily reported.
Newsis reported that the grilling appears to have continued earlier today, when the committee convened again, and Hong was again challenged on the issue, with voices calling for a one-year deferral growing increasingly loud.
Hong was quoted as stating:
"Tax deferral is a matter that would require a legal amendment. Currently, we are preparing for taxation as scheduled. Previously, the right and left-wing parties were all in agreement about this. Forcing us to defer on this issue now seems somewhat unreasonable.”
However, the same media outlet noted that with all sides now calling for a one-year deferral, the Deputy Prime Minister is now on increasingly shaky ground.
The Democratic Party and Lee appear to believe that the issue is not worth losing an election over. Maeil Kyungjae reported that a behind-closed-doors meeting saw the leadership of the ruling party effectively decide to postpone the crypto tax until 2023, in line with previous comments on the matter from the Democratic nominee.
The media outlet stated that a “closed” meeting of the election committee saw Lee “directly state” that he intended to postpone the tax with the party leader Song Young-gil also in agreement.
Earlier in November, Park Wan-joo, the Chairman of the Democratic Party’s Policy Planning Committee, said that he would “review the possible suspension of taxation on cryptoassets.”
The same media outlet added that Lee’s move had been “interpreted as an attempt to make up for the low approval rate” among 2030 voters: Recent polls show that only 30% of citizens in their 30s planned to vote for Lee. In the 18-29 age group, the number is lower – at 26%.
The plan, wrote Maeil Kyungjae, is to cultivate policies that will be welcome among 2030 voters, who “are actively participating in crypto investment,” in a bid to boost approval ratings.
Lee is not alone in his opposition to the government’s plans: Yesterday, the main opposition People’s Power Party finally confirmed Yoon as its candidate. Yoon, formerly the Chief Public Prosecutor, has been vocal in his opposition to the crypto tax plan, as has his campaign team.
Speaking to EDaily back in August, Yoon said:
“I am opposed to [crypto] taxation in its current state.”
Kim So-young, a Professor of Economics at Seoul National University, and one of Yoon’s chief economic policy advisors, was quoted as stating that Yoon’s team intended to “review everything, including a possible lowering of the levels or a suspension of [crypto] taxation.”
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