President Lee Jae-myung Orders Full Reconsideration of ISA and Stock Price Suppression Laws... Complaints Over Tax Reform Exceed 3,700

Outcry Over Tax Reform... ISA and Stock Price Suppression Prevention Measures Completely Scrapped

Public backlash against the government's real estate tax reform plan has reached a boiling point. In just six days, over 3,700 opinions have flooded the portal for collecting public legislative input. On the 7th, President Lee Jae-myung ordered a full re-examination of the revisions to the Individual Savings Account (ISA) and the so-called "Stock Price Suppression Prevention Bill." This decision comes in response to the intensifying criticism from young people and individual investors. The existing tax reform proposal was designed to increase the burden of comprehensive real estate taxes by reducing the basic deduction for capital gains tax and raising the fair market value ratio. In particular, the handling of exceptions previously granted to non-residents regarding actual residency requirements emerged as a major point of contention.

Tax experts, including Gu Yun-cheol, point out that the majority of the opinions oppose the increased tax burden. However, it is understood that a significant number of detailed opinions were also submitted calling for improvements to the system's design itself. President Lee's direct intervention and strong instructions are underpinned by a specific diagnosis of the crisis: stock market stagnation and a shift in public sentiment. There is a strong intention to secure stability in the capital market by preemptively blocking policy variables that could cause stock prices to fall.

Core Content of the Bills and Their Impact on the Capital Market

The controversial ISA revision included provisions to reduce or adjust tax exemptions on financial investment income. The dominant market concern is that if the benefits of this account—introduced to encourage long-term investment by individuals—are reduced, it could prompt capital flight from the stock market. The Stock Price Suppression Prevention Bill aims to prevent market disruption by regulating malicious corporate share buybacks or large-scale stock sell-offs.

According to the financial investment industry, policy uncertainty causes a short-term net outflow of individual investment funds and leads to downward valuation by institutional investors.

The government's sudden legislative shift has dampened market sentiment. Critics consistently argue that prioritizing the removal of regulations that hinder the capital market cycle is far more effective for revitalizing investment than achieving fiscal goals for tax revenue. If the government fully accepts the 3,700 opinions submitted within six days of the announcement and shifts to a burden-relief stance, trading volumes in the domestic stock market are expected to rebound, and consumer sentiment may improve.

Sharp Political Conflict and Debate Surrounding Judicial Judgment

In the National Assembly, which exercises legislative power, the ruling and opposition parties are sharply divided over economic and judicial issues. Rep. Han Byeong-do strongly urged the opposition party to cooperate on the processing of substantive housing bills, criticizing their passivity on housing supply issues. Conversely, the ruling party appears to be in a contradictory position, emphasizing the justice of taxation and curbing real estate speculation while highlighting the necessity of taxing the wealthy more heavily.

Meanwhile, former Marine Corps 1st Division Commander Lim Seong-geun, a key figure in the death of Corporal Chae, was sentenced to three years in prison in a second trial. Democratic Party spokesperson Lee Ju-hee stated in a written briefing that while reiterating the confirmation of command responsibility was significant, the sentence was pathetic in the face of the bereaved family's collapsed hearts. She called it a "slap on the wrist" verdict and urged the special prosecutor to appeal immediately to ensure serious accountability is established. There is an urgent need for social consensus on whether the level of punishment in the military judicial system aligns with public legal sentiment.

Procedures Following Legislative Reconsideration and Market Outlook

Following President Lee's order for reconsideration, government ministries and the National Assembly are expected to launch a full-scale revision of the tax reform plan. Relevant tax authorities, including the Ministry of Economy and Finance and the National Tax Service, are seriously considering a full adjustment of the actual residency exceptions and the calculation method for the fair market value ratio to quell investor backlash. This is because voices calling for an end to the vicious cycle where the slump in the real estate market delays the recovery of the real economy are growing louder.

In the short term, volatility in the stock market is expected to gradually ease as uncertainty regarding the tax reform bill is removed. If the net inflow of investment funds resumes, it is likely to lead to improved profitability for financial companies and a better funding environment for businesses. As the outcomes of the independent counsel and major political figures' judicial proceedings pick up speed as scheduled, the processing speed of economic and livelihood bills during the remaining National Assembly extraordinary session will serve as a key variable influencing future macroeconomic indicators.