President Moon Jae-in on Friday stressed the need to keep encouraging retail stock investors here with a focus on boosting South Korea's equity market, Cheong Wa Dae said.

The statement came in response to a strong backlash against the government's taxation law revision plan to expand capital gains taxes for retail investors.

"It should not be (implemented in) a way to shrink the stock market or discourage retail investors," the president was quoted as saying by Cheong Wa Dae spokesman Kang Min-seok at a press briefing.

Moon said polices should be "acceptable" by the people, adding it's time to "encourage" retail investors who have propped up the local stock market amid the COVID-19 crisis, according to Kang.

"President Moon said there's a need for the domestic stock market to get stronger and instructed (relevant authorities) to think more importantly of the role of retail investors," Kang said.

The finance ministry earlier announced a scheme to impose taxes of up to 25 percent on annual capital gains exceeding 20 million won ($16,000) for retail investors starting in 2023. (Yonhap)