Kim Yong-beom, the presidential policy chief who served as the control tower for President Lee Jae-myung's economic agenda, resigned abruptly on the 1st. Criticism of the government's property policies and turmoil in financial markets following the introduction of single-stock leveraged exchange-traded funds are cited as reasons behind the departure. The government also said the same day that it would scrap a plan to lower the basic comprehensive real estate tax deduction for owners of a single home they do not live in to 900 million won, keeping the current threshold of 1.2 billion won based on official assessed value.
Kang Yu-jung, senior presidential spokesperson, held an unscheduled emergency briefing and said, "Chief Kim offered his resignation yesterday (Aug. 31), and President Lee Jae-myung accepted it today." It is the first replacement at the chief level since the Lee administration took office in June last year.
Analysts say friction with the ruling party over the property tax overhaul contributed to Kim's sudden exit. The Democratic Party of Korea had pressed for revisions to the government's tax plan, which would have varied the tax burden on single-home owners depending on whether they actually live in the property, but the government was said to be leaning toward submitting the original draft to the Cabinet unchanged. Kim in particular argued for keeping the original version, putting him sharply at odds with the ruling party, according to sources.
With Lee's approval rating recently falling to the 30% range, the change is also seen as a personnel shake-up aimed at restoring confidence in the government's property policies. The case for replacing Kim gained further weight as the process of introducing single-stock leveraged ETFs, which he spearheaded, is expected to become a flashpoint at the National Assembly's parliamentary audit of government agencies. A ruling bloc official said, "I understand that voices poured in within the ruling party arguing it would be undesirable to replace only the economy minister while leaving Chief Kim, the policy control tower, in place at a time when approval ratings have fallen because of instability in property policy and the ETF controversy."
The government also dropped a plan, included in the tax overhaul announced on the 3rd of last month, to raise the cap on annual increases in the comprehensive real estate tax to 200% from the current 150%, and will keep it at the current level. Rules for general individual savings accounts were also revised so that, as is the case now, there is no maturity limit and holders who do not use up the annual contribution ceiling of 20 million won can carry the unused portion into the following year. The finalized tax revision bill will be submitted to the National Assembly for review by the 3rd of this month.
