A recent survey found that public opinion in South Korea leans toward strengthening the current inheritance tax system. (Image: Pixabay/CCL)
SEOUL, Feb. 1 (Korea Bizwire) — A recent survey indicates that a majority of South Koreans support increasing inheritance tax rates, contradicting calls from business groups and conservatives to ease the tax burden.
According to the Korea Institute of Public Finance (KIPF), data from the 16th Fiscal Panel Survey revealed that respondents favored a 5% tax rate on inheritances of 500 million KRW (approximately $344,000) and a 10% rate on inheritances of 1 billion KRW (approximately $690,000).
For inheritances of 300 million KRW ($205,000), opinions were split between tax exemption and a 5% tax rate, while for 100 million KRW ($69,000), most respondents preferred full exemption.
Under the current inheritance tax system, South Korea applies a 5 billion KRW deduction for spouses and an additional 5 billion KRW standard deduction, effectively setting the taxation threshold at around 1 billion KRW. The survey findings suggest that many citizens believe the existing system should be more progressive.
Public Perception vs. Policy Debate
The report notes that many respondents perceive the inheritance tax as less progressive than it actually is. However, the majority view does not necessarily equate to an optimal tax policy, the institute cautioned.
Despite calls from business leaders and wealthy individuals for substantial inheritance tax cuts, the general public remains largely unaffected by the tax, as only a small percentage of estates are subject to it.
Data from the National Tax Service shows that inheritance tax applied to just 20,000 estates in 2023, or 5.7% of the total 350,000 deaths recorded that year. While soaring property values, particularly in the Seoul metropolitan area, have pushed more households into taxable thresholds, the overall sentiment still favors maintaining or increasing taxation.
Political and Ideological Divides
The survey also found notable differences in opinion based on political ideology. Progressive respondents preferred inheritance tax rates that were 2-5 percentage points higher for estates exceeding 1 billion KRW, while conservatives favored rates 2 percentage points lower for estates worth 20 billion KRW or more.
As South Korea grapples with economic disparities and generational wealth transfer, the debate over inheritance taxation is likely to remain a contentious issue in 2025 and beyond.
* Note to editor: The KRW-to-USD exchange rate referenced in the article is based on the rate applicable on the date of publication.
M. H. Lee (mhlee@koreabizwire.com)
