Democratic Party leader Lee Jae-myung speaks at a meeting of the National Assembly on Monday. During the meeting, he said he agreed to abandon the long-debated plan to impose a capital gains tax. The proposed policy is expected to come into effect next year. (NEWS1)

Democratic Party (DP) leader Lee Jae-myung announced Monday that his party has agreed to abolish the capital gains tax, aligning with the government’s efforts to abolish it.

“I have come to accept the abolition of the capital gains tax, which was strongly encouraged by the government and the (People Power Party),” Lee told a National Assembly meeting in Seoul.

“If we base our decision on principles and values, (the capital gains tax regime) should come into force. However, the Korean stock market is currently in a very difficult situation,” Lee said. “I couldn’t help but think about the situation of the approximately 15 million investors in the market.”

The capital gains tax – first introduced by former President Moon Jae-in – was set to take effect in 2025 after the Yoon Suk Yeol administration implemented a two-year extension of the grace period in 2022. Under the proposed plan, retail investors would owe 20 to 25 percent of gains from domestic stock trades worth more than 50 million won ($38,000).

The president pledged to abandon the project altogether in January of this year. However, the government and the Yoon-aligned People Power Party have faced strong opposition from the Liberal Democratic Party, which holds a majority in the National Assembly.

BY KIM JEE-HEE ([email protected])