Chairman of Center for Free Enterprise asserted on Tuesday that inheritance tax (IHT) should be abolished or converted to capital gains tax. Chairman also said that if abolishment is impossible, the maximum rate of inheritance tax should be lowered to 35 percent.

The Center for Free Enterprise also asserted that especially when inheriting major shareholder status, not only extra taxes should be removed but also the tax amount should be reduced.

At a press conference held at the Press Center Tuesday morning, Center for Free Enterprise raised a voice: “Korea imposes 50 percent IHT rate which is the highest in the world. Considering the extra tax rate imposed on management right, the actual tax rate goes up to 65 percent.”

Center for Free Enterprise has researched 123 nations’ inheritance tax policy and discovered that 71 nations do not levy tax on inheritance and 52 nations with such taxation have an average inheritance tax rate of 21 percent.”

Controversy surrounding the abolishment of inheritance tax is expected to be heated since that statement by Center for Free Enterprise came after Chairman of the Korea Chamber of Commerce & Industry, Sohn Kyung-sik’s comment: “Inheritance tax should be progressively converted to capital gains tax since it is taxation of unrealized profit.”

Center for Free Enterprise said, “In Korea, rich’s bequeathment of wealth is not viewed favorably but the more inheritance is interrupted by such draconian tax, the less consumption and savings are made, ultimately depressing capital accumulation and investment. The chain of negative effects eventually leads to deterioration of labor productivity and wages, hurting employees.”

[Eun-jung Kim / KHS]