South Korea’s tax revenue collected from securities transactions in the primary Kospi market so far this year has already surpassed last year’s total thanks to the country’s buoyant stock markets.
The government is projected to collect total 5 trillion won in securities transaction tax revenue from both Kospi and secondary Kosdaq markets by the end of this year, raising expectations for the government may consider cutting the tax levied on income from trading stocks in the second-tier stock market.
According to the government and Korea Exchange on Monday, total tax revenue from securities transactions in the Kospi market reached nearly 1.70 trillion won from Jan. 2 to Nov. 17, already exceeding last year’s total of 1.67 trillion won. The government has been able to collect 9 billion won to 10 billion won more in securities transaction tax revenue every day thanks to high daily securities transaction volume hovering above 6 trillion won on average in the Kospi market. Total tax revenue is forecast to reach up to 1.95 trillion won by the end of the year.
Currently, 0.15 percent of total trading amount is charged as securities transaction tax for Kospi shares and 0.3 percent for Kosdaq shares. The rate for stocks on the Kospi market rises to 0.3 percent when including 0.15 percentage point of special rural development tax that is also charged together.
Tax revenue collected from securities transactions in the Kosdaq market this year is also expected to surpass last year’s. From Jan. 2 to Nov. 17, total transaction in the secondary market topped 703 trillion won, generating an estimated tax revenue of 2.11 trillion won.
Last year, total tax revenue from transactions in the Kosdaq bourse amounted to 2.45 trillion won. This year, the total is expected to reach 2.70 trillion won.
Amid increasing tax revenue, there is a growing call for the government to lower securities transaction tax rate.
Hwang Se-woon, a senior researcher at the Korea Capital Market Institute, said that despite big changes in the country’s capital markets with stock trading becoming more popular over the past 20 years, transaction tax has remained unchanged since it was adjusted in 1996. The government should seek to cut the rate to a reasonable level after reflecting the changes, he said.
By Jin Young-tae and Lee Eun-joo
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