Mixed reactions from Ant investors
Sales surge to avoid year-end taxes
“Mitigating measures include appropriate nutrition”
Only 0.05% of total transfer tax filers
▲ Call for short selling reform
Members of groups such as the National Administration and Legislation Monitoring Network are holding a press conference at Gwanghwamun Square in Seoul on the afternoon of the 9th, calling for improvements in the system to prevent illegal short selling. 2023.11.9 Yonhap News The government is fiddling with the stock capital gains tax standard following the eight-month ban on short selling to boost the stock market, but the market’s response is mixed. There is a prediction that easing the transfer tax standards will revitalize the stock market by reducing the amount of sales made by ‘super ants’ to avoid the transfer tax, but there is also a lot of criticism that it is ultimately a tax cut for the rich in the name of benefiting ant investors.
The discussion on easing stock transfer taxes was raised in an attempt to resolve the problem of a surge in sales volume ahead of the major shareholder confirmation date at the end of the year. Under the current law, if you own more than 1 billion won (or 1-4% of the stock) per stock, you are classified as a major shareholder and must pay 20% of the transfer gains in taxes. For this reason, individual investors continued to sell at the end of the year to avoid becoming majority shareholders. Last year, net selling by individuals amounting to 1.5 trillion won occurred the day before the majority shareholder confirmation date (December 28). Just like avoiding a speed camera, you only slow down during that period.
The government is considering a plan to significantly expand this requirement for major shareholders from 1 billion won per stock to 5 billion won. This is interpreted as an intention to gain the votes of both super ants and ordinary ants investors by revitalizing the stock market.
The ruling party also took steps to ‘communicate fire’. People Power Party lawmaker Kwon Seong-dong said on Facebook on the 13th, “What is urgent now, ahead of the year-end selling bomb, is the normalization of stock transfer tax standards,” and argued on Facebook, “High interest rates are prolonged for a long time, and the performance of domestic and foreign companies is also facing challenges.” At the same time, he said, “The ban on illegal short selling is a measure to eradicate illegal activities that are rotting the stock market to the roots and prevent recurrence. It is like not being able to harvest great fruit without removing ticks. At the same time, in order for the assets of all citizens to grow, appropriate nutritional supplements are needed,” he said, comparing the measure to ease stock transfer taxes to ‘nutritional supplements.’
However, it is unclear whether the easing of transfer taxes can truly create a favorable environment for small investors and revitalize the stock market in the long term. Last year, only 0.05% of all investors reported stock transfer taxes by holding more than 1 billion won per stock.
Kim Yong-won, a visiting researcher at the Nara Living Research Institute, said, “The government’s current policy direction runs counter to the global policy trend of comprehensive taxation on capital gains.”
Reporters Kim Seong-eong and Myung Hee-jin
2023-11-13 15:02:35
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