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South Korea will implement a phased cut in the stock transaction tax as soon as possible and conduct a comprehensive study on securities taxation, said deputy prime minister and finance minister Hong Nam-ki.

“We will incrementally lower the stock trade tax to help reinvigorate Korea’s capital market,” Hong said Tuesday at an event hosted by Maekyung Business Newspaper, the first formal confirmation of a change in the making.

The news boosted retail buying but did not lift the broad market. The main Kospi closed Thursday 0.05 percent lower at 2,228.56 and the junior Kosdaq down 0.45 percent at 747.33.

In Korea, investors are levied a fixed tax rate of 0.3 percent upon trading a stock regardless of whether it leads to a profit or a loss. The rate is higher than that of its Asian peers including Singapore, Hong Kong and China. Most developed countries such as Germany, Japan and the U.S. tax only capital gains.

“We began the assessment last month and are currently halfway through the review process,” Hong said, adding that it is too early to decide on the schedule and scope of the tax cuts.

But given the ruling party’s eagerness to push the motion forward, some officials in the finance ministry project the tax cuts to roll out as early as this year.

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Lowering the tax rate to half the current level could shave 3 trillion won ($2.67 billion) in tax revenue a year, according to experts. A local brokerage house forecast that the country’s daily stock trading volume could surge by more than 1 trillion won if the tax is completely abolished. In 2017, stock transaction tax amounted to 6.28 trillion won, making up 2.4 percent of the government’s total tax revenue.

To offset the revenue loss, the finance ministry is considering expanding the tax scope of capital gains from stock trading and plans to form an independent research panel to study the overall stock taxation system.

Currently capital gains are taxed on a small number of top-tier investors, though the taxation scope has been widening since last year. In April 2018, the holdings threshold subject to capital gains tax was lowered from 2.5 billion won to 1.5 billion won per stock. This is expected to be scaled down further to 1 billion won in 2020 and 300 million won in 2021.

But the move could dampen market sentiment for big investors as the rates are already considered hefty at 20 percent. In 2017, the capital gains tax contributed 2.3 trillion won to government coffers.

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