Credit: Public domain.
Tackling South Korea’s low birth rate has long been a priority for the government. But under the Yoon Suk-yeol 윤석열 administration, the low birth rate is more often used as an excuse to enact laws benefiting the conservative-voting upper-middle class. (See previous coverage, “Will Immigrant Nannies Boost Birth Rates?”) The latest such proposal: tax relief for up to KRW 150m (USD 115k) in gifts from parents to children who are getting married. In other words, a newlywed couple could receive up to KRW 300m from both sets of parents without paying any tax on the gift.
The gift tax relief is targeted at South Korea’s aging Boomer generation, who would otherwise be subject to South Korea’s very high inheritance tax rate - 50% for assets in excess of KRW 3b (USD 2.3m). The ruling People Power Party 국민의힘 defended the proposal as a way to (somehow) boost birth rates by allowing parents to help their newlywed children buy a house.
The Democratic Party 민주당 blasted the proposal, with Floor Leader Park Gwang-on 박광온, saying the tax cut “only benefits the highest income earners and super large corporations” in a July 28 statement. PPP Assembly Member Park Dae-chul 박대출 defended the proposal, arguing that “a family giving a newlywed child KRW 150m is not super-rich.”
On August 1, however, Democratic Party spokesman Kim Han-gyu 김한규 said: “We are partially in agreement with the spirit of the gift tax relief,” an about-face reflecting the party’s need to appeal to voters in Seoul, who shifted heavily rightward in the 2022 presidential election and Local Elections. The Democratic Party suggested amending the gift tax relief to apply instead to gifts following the birth of a child.
