Reforming the Gold Investment Tax: A Path Forward for the Capital Market

The recent debate over the gold investment tax has sparked frustration and concern about the potential for political strife between opposing forces. However, neither enforcing nor abolishing the tax is the answer. Instead, we need to consider a more nuanced approach that takes into account the advancement of the capital market.

The gold investment tax must be implemented in conjunction with the development of the capital market. This requires a multifaceted approach that addresses outdated corporate governance, introduces a duty of loyalty to shareholders for directors, and improves the market valuation system.

First and foremost, we need to reform corporate governance and overhaul the systems and practices that allow controlling shareholders to harm the interests of general shareholders. This includes introducing a duty of loyalty to shareholders for directors and improving the market valuation system to ensure that fair value or net asset value is used in the case of corporate divisions or mergers.

Additionally, we need to prevent companies from abusing their own stock as a means of defending management rights by mandating the burning of treasury stock after purchase. This will help to promote transparency and accountability in the capital market.

Second, the current investment tax law needs to be substantially revised. This includes raising the deduction limit, extending the profit and loss offset period, and mitigating market shock to induce a soft landing for the system. We should also provide tax exemption or low taxation to long-term investors, excluding the wealthy, to encourage responsible investment practices.

Furthermore, administratively convenient systems such as semi-annual withholding tax and imposition of health insurance premiums should be abolished. These systems can create unnecessary complexity and burden for investors, and their abolition will help to streamline the investment process.

Third, the securities transaction tax should be gradually relaxed and abolished at the same time as the gold investment tax is implemented. This will help to eliminate double taxation and promote tax fairness, particularly for retail investors who bear 75% of the transaction tax.

Now is the perfect time to fix the flawed capital market. With interest in the gold market at an all-time high, and various problems and institutional improvement tasks on the table, we have a unique opportunity to make meaningful reforms. If the ruling and opposition parties and the authorities work together without dragging it into a political debate, we can handle this within the current regular session of the National Assembly.

Let’s get started right now and work towards creating a more robust and equitable capital market that benefits all investors.