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The likelihood of slapping taxes on financial investment incomes has increased following the opposition Democratic Party of Korea's (DPK) landslide victory in the April 10 general elections, according to experts Friday.

Retail investors have vehemently opposed this move, with more than 50,000 individuals signing an online petition demanding the abolition of the financial investment income tax. As a result, the issue has been referred to the National Assembly.

According to the Assembly's online petition platform, an individual submitted a request on April 9 to abolish the financial investment income tax. The petition has gained considerable traction, accumulating a total of 54,636 signatures as of 10 a.m. on Friday.

If the number of signatures exceeds 50,000, the National Assembly is required to review the agenda within its National Policy Committee.

The financial investment income tax imposes a 20 percent charge on the total income derived from financial products, including stocks, bonds, funds, and derivatives, exceeding 50 million won ($36,205), with a higher rate of 25 percent applied to earnings surpassing 300 million won.

This tax was slated for implementation last year after the passage of a bill in 2020. However, with the inauguration of President Yoon Suk Yeol, a bipartisan agreement deferred its implementation until 2025. While the government aims to abolish the tax, the DPK insists on proceeding with its original implementation plan.

Investors currently face the securities transaction tax when engaging in stock market transactions, which is levied on every trade, regardless of whether it results in a profit or loss. Additionally, major shareholders who own more than 5 billion won of a single stock are subject to the capital gains tax.

The financial investment income tax was intended to replace the securities transaction tax, aligning with practices in other major economies such as the United States, Japan, and Germany.

Retail investors argue that the financial investment income tax is unfair as it exclusively targets them, while exempting foreign and institutional investors.

"Due to treaties preventing double taxation, foreign investors and foreign-based funds are not liable for taxes on domestic investment income. Consequently, the entire burden of this tax rests on retail investors," the petitioner said.

They are also concerned that the implementation of the tax could further depress the stock market. They anticipate a significant increase in the end-of-year tax avoidance phenomenon, where investors withdraw funds to evade exceeding tax thresholds.

"Many investors will move to foreign markets, choosing to avoid the vulnerable domestic market," the petitioner added.

Experts believe that the abolition of the tax is unlikely, as the current term of the National Assembly is nearly over.

"Even if the next National Assembly attempts to address the issue in their next term, strong opposition from the DPK could prevent the bill from being passed. Unless there are special circumstances, the implementation is set to go ahead next year," said Joo Won, director of the Hyundai Research Institute.

But they caution against excessive worries.

"Although concerns exist about individual investors withdrawing liquidity to avoid tax payments, fears of a continuous outflow of capital may be overblown, given positive developments such as enhanced benefits from Individual Savings Accounts," said Kim Young-hwan, a researcher at NH Investment & Securities.