Chairman Choi Jong-gu of Financial Services Commission (FSC). (Photo: FSC)

Chairman Choi Jong-gu of Financial Services Commission (FSC) said it is time to consider the removal of taxes on stock trading, noting they invite problems including double taxation, and scraping the tax may spur the stock market trading.

However, the Ministry of Economy and Finance said it is “Not considering” getting rid of the tax.

With the stock market setting bearish records and facing further downturns, analysts are siding with the regulator.

They say policymakers and lawmakers should consider the abolition for the sake of boosting the capital market on a par with other economies. “The government should consider phasing it out as the scope of capital gains taxes increases over the next two years.” said Lim Dong-won, a researcher at Korea Economic Research Institute.

“The strength of the financial market depends on the vigor of the capital market. But the capital market is facing a decline.”

Korea’s 0.3 percent rate is higher than China’s 0.1 percent, Hong Kong’s 0.1 percent and Singapore’s 0.2 percent.

The United States and Japan do not have taxes on transactions, the analyst noted, citing data from the Organization for Economic Cooperation and Development.

The issue whether to repeal the tax or not has been around since the global financial crisis of 2008. Then and now, the finance ministry’s stance on the matter has remained the same, which has been opposite to the regulator.

When the crisis erupted and stock markets around the world were battered, the FSC sided with the abolition. But the finance ministry opposed it given taxes from stock trading helped increase the national tax revenue amid a growing need for a budget to finance welfare.

The tax rate has been standing at 0.3 percent since the late 1970s. It was reintroduced to keep speculators away from the market after the country discontinued imposing the tax to attract investors and develop the capital market in the early 1970s.

An investor has to pay a 0.15 percent tax included in the 0.3 percent rate whenever they buy and sell a KOSPI-listed stock. The 0.15 percent collected by the government is used for the development of rural areas. When they sell it, they also have to pay taxes on gains from the investment in the stock.