Financial Sector Voices Concerns Over Education Tax Increase

The government's plan to double the education tax rate for financial companies earning over 1 trillion won annually has met with strong opposition from the financial sector, including banks, insurance companies, and savings banks.

Impact on Insurance and Card Companies

The insurance industry warns of a significant additional tax burden, estimating an extra 350 billion won for major companies, potentially affecting policyholders and capital adequacy ratios. Card companies, facing a tough business environment, argue the tax hike could exacerbate their financial struggles, with net profits already down by 18% in the first half of the year.

Alternative Proposals and Broader Implications

Associations have proposed alternatives, such as changing the tax base to profit and loss, to mitigate the impact. The banking sector fears the hike could lead to higher costs for consumers, with education tax payments for major banks potentially doubling to 980 billion won.