South Korean Politician Seeks End to Crypto Income Tax Over Capital Flight Concerns

South Korean politician Rep. Song Eon-seok of the People Power Party has called for an end to cryptocurrency income tax, citing a need for parity with stock taxes and concerns over capital flight.

In a Facebook post on September 16, Song argued that the global nature of the crypto market makes it vulnerable to capital outflows if taxed differently than stocks. He noted that digital assets trade in a unified global market, which could drive funds to overseas markets such as Singapore and Hong Kong if South Korea imposes its own tax.

Song also criticized the government's plan to set aside additional tax revenue in a future response fund, saying it should be used instead to repay national debt or ease the public's tax burden. He pointed out that South Korea's national debt next year is projected to reach 1,519.8 trillion won ($1.1 trillion), with tax revenue rising by 194.2 trillion won ($140.3 billion) but still resulting in a net increase of 106 trillion won ($76.6 billion) in national debt.

Song urged the government to pursue tax reform aimed at reducing the public's tax burden, including earned-income taxes, rather than swelling its fiscal coffers with increased revenue.