FSC chief nominee voices need to scrap introduction of financial investment income tax

July 5, 2024

The nominee to head the Financial Services Commission (FSC) said Friday there is a need to scrap a planned introduction of the financial investment income tax, saying it may negatively impact capital markets.

Kim Byoung-hwan, a former vice finance minister who was nominated as the FSC chief on Thursday, made the remark as he began preparing for a parliamentary confirmation hearing.

“Implementing the financial investment income tax has a negative impact when considering it in relation to revitalizing the capital market and promoting joint development of companies and people,” he said while speaking briefly with reporters on his way to his new office in downtown Seoul.

The new tax was originally set to be introduced last year, but its implementation has been postponed until the start of 2025.

The efforts to scrap the new tax at the National Assembly will be led by the finance ministry, said Kim, who is currently the first vice minister of finance.

“I will help with anything I can (in that process) as the chairman of the FSC if appointed,” he added.

Kim highlighted the need to address four major issues — real estate project financing loans, household debt, growing debt of small, self-employed businesses and the fiscal soundness of savings banks — calling them major financial risks.

“Our economy tends to depend excessively on debts,” he said. “We need to change the way (we develop), instead of just leaning on debts since it can quickly lead to a systematic problem when there is an external shock, limiting our economic growth.”

The nominee promoted the government-led corporate value-up program to this end.

“The value-up program basically seeks to promote joint development of firms and their shareholders by making sure that companies are adequately valued and their profits are shared equally with shareholders,” Kim said, adding it will “help revitalize the capital market and businesses to raise funds smoothly.”

“It will help supply funds through other means than loans in that sense,” he added.