The main opposition Democratic Party of Korea on Friday decided to let its leadership make the final decision on whether to postpone the adoption of the financial investment income tax, which is set to take effect on Jan. 1.

The decision made during a general meeting of party lawmakers in the morning, comes as the ruling People Power Party has been calling for the Democratic Party, which currently holds the majority of seats in the 300-member Assembly, to agree on the abolition or a postponement of the tax scheme, for the benefit of retail investors.

The tax scheme, which was passed by the opposition-led Assembly during the previous liberal Moon Jae-in administration in 2020, was initially set to take effect last year, but has been delayed twice so far, due to resistance from the conservative bloc and groups of retail investors. Main opposition lawmakers have also expressed divided views on the adoption of the new scheme.

“There were some lawmakers who were against passing the decision onto the leadership, but the majority has agreed to do so,” Democratic Party Floor Spokesperson Rep. Noh Jong-myun told reporters following the general meeting.

“The final decision of the party and the timeline (will be announced by the leadership),” he added.

Observers say that the leadership is leaning toward postponing the introduction of the financial investment tax scheme.

Democratic Party Chair Rep. Lee Jae-myung said in an Aug. 13 debate held among candidates for the party leadership race ahead of the convention, held later in the same month, that there is a “need to temporarily delay” the adoption of the tax scheme.

But at the same time, he distanced himself from those supporting abolishment, saying that with the further cut back in the stock transaction tax expected, the financial investment tax works as a replacement to block further decline in tax revenues.

The stock transaction tax, for listed shares traded on the Korea Stock Exchange, which stood at 0.23 percent in 2022 was slashed to 0.18 percent this year and is planned to further drop to 0.15 percent starting next year.

In recent years, both sides of the political spectrum have voiced the need to repeal the stock transactions tax as it could help boost the domestic equity markets.

Finance Minister Choi Sang-mok recently said during a debate hosted by the Kwanhun Club, an association of senior journalists that the government seeks to pursue a step-by-step abolishment of the stock transaction tax as planned.

In the months leading up to Friday’s decision, the Democratic Party was divided on whether the financial investment income tax scheme should go into effect. Those supporting the tax plan claimed that it would help cushion a shortfall in tax revenues.

Under the new scheme, capital gains of over 50 million won ($38,000) from stock investments will be subject to a 20 percent tax, while earnings exceeding 300 million won will be subject to a 25 percent tax.

In the morning, People Power Party Chair Han Dong-hoon joined a rally for the abolition of the financial investment income tax staged by the Korea Stockholders Alliance, an advocate group comprised of some 20,000 retail investors, in front of the Assembly in western Seoul.

“The abolishment of the financial investment income tax means (improvement) of the people’s livelihoods. There are no other options,” Han said at the rally.

Jung Eui-jung, the chief of the KSA echoed Han’s sentiment saying that if the Democratic Party chooses not to abolish the tax scheme, they would become the “enemy of the people.” Jung stressed that he believes the scheme would only benefit hedge funds, while becoming a major hurdle for retail investors.