Kwon Chil-seung, chairman of the Democratic Party's policy committee, signaled that the government's property tax overhaul could be revised, saying the party would "respond while closely watching market trends" even as he called the plan "a realistic and reasonable adjustment in which the party and the government clearly set out the basic direction of a tax system centered on where people actually live."
In an interview with Seoul Economic Daily on the 6th, Kwon said of the comprehensive real estate holding tax overhaul, speaking in a personal capacity, "Since the holding tax is a tax on ownership, focusing taxation on ownership fits the purpose of the levy." He added, "By contrast, I think looking more heavily at residence for the capital gains tax is what brings balance to the two tax systems." The remarks are read as meaning that the basic deduction threshold for the holding tax should not differ depending on whether the owner lives in the home, while the capital gains tax should keep such a distinction as in the government plan.
On a provision granting exemptions from the 52-hour workweek cap for high-paid professionals and researchers inside mega special zones, Kwon said, "The two values — securing the momentum for innovation, which industry wants, and protecting the right to health, which labor wants to defend — are by no means a zero-sum game in conflict with each other." He stressed, "As policy committee chairman, I will take the lead and produce a point of agreement." He added, "This must be approached very cautiously, limited to extremely narrow core areas such as high-paid, highly skilled specialized research and development, not general workers."
As major legislative tasks for the second half, he listed a strategic export financing support act, a future response fund act, the Capital Markets Act covering mandatory tender offers, and a framework act on digital assets.
The following is the full text of the interview.
— Congratulations on becoming policy committee chairman. What are your ambitions going forward?
— I feel the weight of taking on the heavy duty of coordinating the party's policies at an important time. The second year of an administration is a crucial period that determines whether a government succeeds. We have passed the stage of presenting a vision, and I believe this is the golden time to prove our capabilities through concrete implementation. Having experienced both legislation and administration, I have felt deeply how important organic cooperation is between the party and the government, and between the legislative and executive branches, to embed policy that starts from the field. Going forward, the party's policy committee will be a solid bridge that works hand in hand with the government. I will coordinate in advance so that the core tasks the government is pursuing run smoothly without missteps, and I will meticulously back them up with the necessary legislation and budget without missing the timing.
— The largest budget ever has been drawn up. There appear to be areas needing supplementation and revision in the review of the budget and tax law, including the property tax overhaul. Please explain the direction of the budget and tax reform review.
— We will support the largest-ever fiscal package so that it is properly spent on growth drivers, young people, regions and people's livelihoods, but because the scale is large, there is a need to review the effectiveness and feasibility of projects more strictly. The president has also instructed the government to actively respect reasonable supplementation by the National Assembly. The government's tax reform plan is a realistic and reasonable adjustment in which the party and the government clearly set out the basic direction of a tax system centered on where people actually live, but we plan to respond while closely watching market trends.
As major legislative tasks, a mega special zone special act supporting the three mega projects, a strategic export financing support act strengthening financial support for strategic industry exports, and the Urban Improvement Act and the special act on promoting urban redevelopment are currently under discussion.
For the budget review, we intend to provide support so that necessary fiscal investment is made sufficiently, centered on five priority investment areas. With enormous sums going in — 21.3 trillion won for the three mega projects and artificial intelligence, 62.8 trillion won for future growth engines and 43.3 trillion won for youth support — we will check the government plan's investment plans project by project so that additional tax revenue from the semiconductor boom contributes to sustainable growth rather than a short-term expansion of spending.
— What is your view on the tax law amendment?
— Among lawmakers whose districts are in Seoul, where the holding tax actually applies widely, the majority seem to be saying we should not draw a distinction between owners who live in the home and those who do not. That is understandable. I will have to listen to other lawmakers as well and look closely at what suits market conditions. Personally, since the holding tax is a tax on ownership, I think focusing taxation on ownership fits the purpose of the levy, and that looking more heavily at residence for the capital gains tax is what brings balance to the two tax systems.
— As policy committee chairman, how do you plan to settle the controversy over the working-hours exemption in the mega special zone act?
— The essence of the mega special zone act lies in securing global competitiveness for Korea's future advanced industries and achieving balanced national development. The two values — securing the momentum for innovation, which industry demands, and protecting the right to health, which labor wants to defend — are by no means a zero-sum game in conflict with each other. What I felt keenly while serving as minister of SMEs and startups and as a member of the National Assembly's trade, industry, energy, SMEs and startups committee is that for advanced R&D, a flexible environment allowing immersion and concentration matters far more than the sheer quantity of all-night work. Of course, labor's concern is also very valid that indiscriminately lifting working-hours rules would infringe on workers' basic right to health and risks a return to long-hours practices. Therefore, the 52-hour exemption must be approached very cautiously, limited to extremely narrow core areas such as high-paid, highly skilled specialized R&D, not general workers. I will push this forward with the resolve of setting a marker for the future, first reaching agreement on the framework for decision-making and then communicating candidly with industry and labor.
— There is opposition even within the Democratic Party to applying the 52-hour exemption.
— It is a highly contentious issue. In most cases, I think it is better for the governing party to handle matters quietly. If people make noise to put their own faces forward, the government and the governing party both take damage. We need to gather opinions under the table and find a common denominator on how far to go, because the white-collar exemption — carving out high-paid researchers and professionals from working-hour rules — and working-hours flexibility vary enormously once you get into the details. These are things the governing party has to take responsibility for, and on the substance, I am in a position where I must be out front sorting it out. I have no intention of avoiding responsibility, and since there will be objections from various quarters, I intend to talk them through candidly.
— Complaints from people buying homes to live in are quite strong. Land transaction permit zones have been designated across all of Seoul and parts of Gyeonggi Province, bringing considerable restrictions. Young people trying to buy a home in particular see this as a limit on fair competition, and public sentiment is turning. Will the Democratic Party prepare measures for owner-occupier buyers?
— The land transaction permit system and lending rules are measures to curb speculative demand, but they must be operated carefully so that excessive restrictions do not fall on young people and non-homeowners who are actually trying to buy a home. Under the principle of minimizing harm to owner-occupier buyers, the Democratic Party will flexibly review pending issues related to supply, finance and taxation.
At the same time, what the National Assembly must hurry to do is overhaul the laws and procedures blocking supply. Following action on follow-up supply bills such as the Housing Act and the Special Act on Public Housing, we will also move faster on the Act on Improvement of Urban Areas and Residential Environments and the special act on promoting urban redevelopment, in order to speed up redevelopment and rebuilding projects.
Specifically, I think the consent rate for establishing a redevelopment association should be adjusted from the current 75% to 70%, and that for improvement projects of 500 units or fewer in Seoul, the relevant authority should be delegated to district office heads.
We will put policies such as expanding the coverage and limits of jeonse loan guarantees under the special program for young people, and creating a universal jeonse-based rental housing program for young people, at the top of the priority list for the future generation including young people and newlyweds, and we will pursue legislation and institutional improvements in a direction that blocks speculative demand while widening the chance for owner-occupier buyers to buy a home.
— Since the controversy over single-stock leveraged exchange-traded funds, the Lee Jae-myung government's capital market achievements have been overshadowed. What tasks should be actively pursued in the capital market going forward?
— The capital market reform achievements pursued so far and the single-stock leveraged ETF controversy need to be assessed separately. We laid the foundation for protecting ordinary shareholders through the revision of the Commercial Act, and follow-up measures that raise market trust, such as fair-value mergers and preventing duplicate listings, are continuing without a hitch. Single-stock leveraged ETFs started from the policy intent of absorbing investment demand flowing overseas into the domestic regulated system, but after the products launched we went through overheating and tighter rules, and we learned the lesson that a safety net protecting investors must go hand in hand. Still, the task of building an attractive market into which long-term overseas capital flows steadily remains valid. Going forward, I see the direction of tasks to pursue in finance as inclusive finance and digital finance, on top of productive finance.
First, on productive finance, I will align foreign exchange market access and the settlement and account systems with global standards to lead to inclusion in the MSCI developed markets index, and build an attractive market into which long-term overseas capital flows steadily. In addition, as an extension of Commercial Act reform, I will flesh out the mandatory tender offer system and improve the framework so that ordinary shareholders are also guaranteed a fair share when control premiums are traded.
Also, so that the warmth of finance reaches all citizens evenly, I think it is necessary to swiftly push for the establishment of a financial stability fund for low- and middle-income households to secure the sustainability of policy finance, and to strengthen the eradication of illegal private lending and the ladder of debt restructuring. So that financially vulnerable groups and borrowers who repay faithfully are not excluded from regulated finance, I will firmly build a financial safety net for low- and middle-income households that lowers the threshold and thickens support for a fresh start.
On digital finance, I will establish market trust by clarifying in law the rules for stablecoin issuance and exchanges' responsibility to protect assets. In particular, I will do everything possible to prevent investor harm by putting a tight safety net in place alongside it.
— As a member of the health and welfare committee, what legislation are you seeking to pursue?
— The theme I took most seriously on joining the Health and Welfare Committee was creating an institutional framework spanning two pillars: improving public health and securing future growth engines.
While serving as minister of SMEs and startups, I saw firsthand bio and healthcare innovation companies that could not commercialize on time because they were held back by an ambiguous legal framework and regulations. What the venture companies asked for at the time was to be introduced to officials at the Ministry of Health and Welfare and the Ministry of Food and Drug Safety. So right after joining the welfare committee, I intend to pursue enactment of a digital healthcare act and revision of the Health and Medical Technology Promotion Act as top priorities.
The proposed digital healthcare act is meant to establish a legal basis for the safe use of health and medical data and for promoting the digital healthcare industry. Until now, the use of medical data has relied on exceptional permission under Ministry of Health and Welfare guidelines, without a statutory basis, amid overlapping regulation from multiple laws including the Personal Information Protection Act. As a result, the legal foundation has been weak, and innovation companies and even frontline medical staff have had to carry constant legal risk. So while thoroughly guaranteeing data subjects' right to control their own personal information, I intend to reasonably unlock the use of standardized health and medical data and of pseudonymized and de-identified data, creating an institutional environment in which industry can take bold risks on the basis of legal predictability.
The proposed revision of the Health and Medical Technology Promotion Act would introduce a specialized regulatory sandbox led by the Ministry of Health and Welfare so that health and medical R&D results can be linked to commercialization on time. What bio and healthcare innovation companies want most desperately now is to sit down with officials at the Ministry of Health and Welfare and the Ministry of Food and Drug Safety, who have both technical expertise and regulatory authority, and explain the safety and potential of their technology directly. Through legislation, I will open that door to communication so that innovative technology returns quickly as medical service benefits for patients and the public.
