With the National Assembly's tax subcommittee set to review this year's tax code revision plan in three weeks, a shift in the government's stance on major tax policies is becoming apparent. The likelihood is growing that existing positions will be reconsidered — from the taxation of cryptocurrencies, scheduled to take effect next January, to the production tax credit for electric vehicles, which was left out of the government's proposal. Lawmakers from both the ruling and opposition parties are also introducing bills to be reviewed alongside the government plan, putting a "second round" of the tax debate in full swing.
Kim Min-seok, leader of the ruling Democratic Party of Korea, said on the 22nd during an appearance on the party's YouTube channel that cryptocurrency taxation "needs to be settled this year." Kim said he had also proposed to Lee Hyoung-il, deputy prime minister and minister of economy and finance, a day earlier that they "conduct a final review and reach a conclusion." The time has come, he said, for intensive discussion on whether to proceed with taxation as planned in January, to supplement the system or to postpone implementation.
The government's tone has changed as well. At his confirmation hearing last month, Lee said the tax burden would not be heavy because many investors hold only small amounts. But at a parliamentary audit on the 22nd, he again stressed that he would listen broadly to the National Assembly, the industry and experts. Some observers suggest the government has effectively leaned toward another postponement, mindful of the burden on state affairs, including the president's approval rating, and of public opinion among younger voters.
The production tax credit for electric vehicles, which was excluded from this year's tax revision plan, is also back on the negotiating table. Yoon Hoo-duk of the Democratic Party, Yoon Han-hong of the People Power Party and 17 other lawmakers jointly introduced a bill on the 16th that would grant tax benefits to electric vehicles produced in South Korea. Adjustments to income tax brackets and rates, along with an expansion of the inheritance deduction for spouses, are also at issue. Further revisions to property tax rules remain possible. The government has already withdrawn its plan to reduce the basic comprehensive real estate tax deduction for owners of a single home who do not live in it, but differences in deductions based on whether the owner resides in the home remain. Kim Woo-chul, a professor of taxation at the University of Seoul, stressed that "the National Assembly's review must involve thorough examination and social consensus to secure predictability in tax policy."