The National Treasury Research Forum, co-chaired by Rep. Na Seong-lin of the ruling Saenuri Party and Rep. Lee Yong-sup of the opposition Democratic United Party, was held on Sept. 12 under the theme, “The Derivatives Transaction Tax Impact on Capital Market and Treasury Income,” attracting some 300 people from the government, academia, and research organizations. The event took place at the auditorium of the National Assembly Library in Yeouido, Seoul.

The first part of the forum was presided over by Rep. Yoo Sung-kull with the opening speeches by co-chair of the event Rep. Na and Lee and followed by speeches by Reps. Park Byeong-seug, vice speaker of the National Assembly; Kang Ghil-boo, chairman of the Strategy and Finance Committee; Kim Jong-hoon of the Political Affairs Committee, Vice Minister Shin Jei-yun of the Ministry of Strategy and Finance; and Chairman Park Jong-soo of the Korea Financial Investment Association.

The second part of the event, presided over by Chairman Ock Mu-seok of the Taxation Law Academics Society, included presentations of papers by professor Lee Joon-bong of Sungkyunkwan University in Seoul; Manager Nam Kil-nam of the Derivative Products Office of the Capital Market Research Institute; Hong Bum-kyo, headquarters manager of the Taxation Research Institute; and reports on overseas examples by Edward H. Chow, professor at the Taiwan National Political University, on the derivatives products market in Taiwan.

Dir-Gen. Kim Hyung-don of the Taxation Policy Office of the Ministry of Strategy and Finance (MOSF); Dir-Gen Kim yong-bum of the Capital Market Bureau of the MOSF; Professor Park Chang-kyun of Chunang University; and Seoul Women’s University Professor Lee Joon-haeng participated in the discussion following the papers presentations.

First, Manager Hong said taxing derivatives products would not reduce transactions of derivatives products, and in the case of Taiwan, after the tax was assessed on derivatives products, the market expanded more than that of Singapore and it also was expected to increase treasury revenues.

Prof. Lee, in his presentation, said the assessment of tax on derivatives products would seriously hurt the capital market and reduce the income of the related economic entities, with the tax revenue increase claimed by the proponents of the tax not likely to happen.

Rather, he said, the tax revenue in the first year of the tax assessment would be reduced by more than 67 billion won and a total of 410 billion won over the first five years.

Dir.-Gen. Nam, who presented the financial matters from taxing derivatives products, claimed that the assessment of the tax will not only reduce the transactions of derivatives products, but also trade in the stock market, slowing down all capital market transactions.

Professor Edward Chow of Taiwan said once the tax on derivatives products is implemented, it would be very hard to reform the system, Korea should learn from Taiwan’s experience with the tax on derivatives products and should seriously reconsider the introduction of the tax in Korea’s financial market.

Rep. Kang Kil-boo, chairman of the Strategy and Finance Committee, said he hopes to see a conclusion on the matter based on the discussions and papers presented at the forum, as they were very timely with the various legislative proposals with regard to the tax on derivatives products coming up for parliamentary approvals, especially after seeing the kinds of problems expected to occur when the tax is assessed presented in the forum.

Rep. Na, who co-chaired the forum, said the forum would boost the public awareness of the tax, along with its bad and good sides. “We would need further discussions on the tax as to its appropriateness,” he added.

Rep. Lee, who also co-chaired the event, said both ruling and opposition parties agreed with the revision of the Stock Trade Tax Assessment Law at the 18th regular session of the National Assembly’s Strategy and Finance Committee and the legislative Committee, but was not put on the floor for approval due to objections by a number of legislators. He said that the Democratic United Party has already proposed for the revision of the law intended to increase tax revenues and raise the fairness of the taxation of derivatives products transactions, and he hoped that the details of the discussion at the forum would be helpful to the passage of the revision of the law at the National Assembly.