Financial Supervisory Service (FSS) Gov. Lee Bok-hyun speaks during a meeting at the Korea Financial Investment Association in Seoul, April 18. Yonhap

Financial Supervisory Service (FSS) Gov. Lee Bok-hyun echoed President Yoon Suk Yeol's opposition to a plan to implement a financial investment income tax next year.

During a press meeting on Thursday with reporters from English-language news outlets, Lee said that the financial investment income tax, which is slated to be introduced early next year, should be postponed further, considering the current situation of the Korean capital markets.

"The framework of the financial investment income tax bill was adopted a few years ago, yet it needs a close reexamination whether its initial structural design and the current market situation still match," the FSS chief said.

Lee explained the landscape surrounding the domestic capital markets and investors has evolved significantly since then, thereby requiring the entire taxation system over the capital markets to be overhauled organically.

He said that the "current tax bill as it is" should be discussed again, because the implementing tax scheme without revision would slash down the domestic stock markets' total size.

He emphasized that the financial authorities have been taking a "comprehensive perspective" in key issues, including a short selling ban and financial investment income tax, in order to ultimately bolster and boost the volume and size of the Korean capital markets.

"It is necessary to deeply ponder the potential impacts of the implementation of the financial investment income tax comprehensively and ruminate how to buoy the Korean stock markets further, in terms of the number of investors, market size and trading volumes," Lee added.

The financial investment income tax can be delayed further if lawmakers agree to do so during a National Assembly session later this year.

Regarding the ongoing short selling ban, the FSS head said that the financial regulators have been devising measures to improve market systems surrounding short selling practices in the long term. He said the exact details of how to lift the ban, which was originally scheduled to be lifted in July, are still in consideration.

"Financial authorities are delving into how to resume short selling in the country while closely weighing up positions of retail, institutional and foreign investors," Lee said.

He added that he sees the FSS' in-depth investigations into more than a dozen global investment banks' illegal short selling transactions — some of which are still being investigated — have proven to be fruitful in that they touched upon some of the grey areas over which retail investors had long outcried and built distrust against the system's fairness.

"I believe the improvement of the short selling system should be based on two axes: pursuing equal opportunities on each investor's footing while effectively restraining illegality of short selling practices," Lee said, adding that the vice chief of the FSS will visit Hong Kong next week to meet with global institutional investors for further discussions on these issues.

The FSS head noted that the Korean financial regulators will keep pursuing measures to bolster the country's capital markets through the government-led Corporate Value-up Program, systemic reforms and relevant legal revisions, aiming to ameliorate them to the levels of globally advanced capital markets.

Meanwhile, he accentuated the country's real estate project financing market situation is manageable, and the authorities are fully prepared against the risk factors of the market.