Petition for Abolition of Financial Investment Income Tax Reaches 50,000, Beneficiary Stocks and Outlook for H2

A national petition calling for the complete abolition of the Financial Investment Income Tax has officially been referred to the relevant standing committee after securing over 50,000 signatures. As the demands of retail investors seeking complete abolition rather than just a deferral intensify, political discussions on scrapping the tax are gaining rapid momentum.

Full-fledged Discussions on Abolition: Will Market Uncertainty Clear?

The Financial Investment Income Tax, originally slated for introduction next year, imposes a 20-25% tax on financial investment gains (stocks, bonds, funds) that exceed a certain threshold. Retail investors have strongly opposed the tax, arguing that it would exacerbate the 'Korea Discount' and prompt major investors to flee the market, thereby severely damaging the competitiveness of the domestic capital market. Reaching the 50,000-signature milestone reflects the explosion of 'tax resistance' and concerns over shrinking investor sentiment.

With both ruling and opposition parties successively proposing bills to defer or abolish the tax, expectations are growing that a core policy uncertainty weighing down the market will be resolved. In fact, whenever discussions on abolishing the tax become concrete, the KOSPI and KOSDAQ indices have reacted positively. If the abolition is confirmed, the suppressed investor sentiment is expected to recover significantly.

Expected Improvements in Retail Supply and Demand, and Benefits for Small to Mid-cap Stocks

Experts predict that if the tax is completely abolished, funds from high-net-worth individuals—who were highly likely to exit the market to avoid the tax burden—will remain in the domestic stock market, greatly improving the overall supply and demand conditions. In particular, the KOSDAQ market and small to mid-cap theme stocks, which have a high proportion of retail trading, are likely to directly benefit and secure strong upward momentum even in a volatile market.

FAQ: Key Questions Regarding the Abolition of the Financial Investment Income Tax

• Q. What is the next step after the petition reaches 50,000 signatures?
  A. According to the National Assembly Act, a petition with 50,000 signatures is referred to the relevant standing committee (Strategy and Finance Committee) for formal review. This will serve as the basis for full-scale discussions on revising the law between the ruling and opposition parties.
• Q. Which stocks are most advantageous if the tax is abolished?
  A. While it is a positive factor for the overall stock market due to the recovery of investor sentiment, KOSDAQ blue chips, growth stocks sensitive to retail supply and demand, and low P/B ratio stocks currently receiving policy momentum from the Value-up Program may receive priority attention.
• Q. When is the final decision on the abolition expected?
  A. It will be intensively discussed along with the review of the tax law amendment bill in the upcoming regular session of the National Assembly (September), and a final conclusion is highly likely to be reached within this year.