Proposals put forward to transform stock income tax arrangement
Kuomintang (KMT) lawmaker Luo Ming-cai ( ) has proposed amending the Income Tax Act and abolishing stock income tax in order to give Taipei’s unpromising stock market a kick.
The collection of stock income tax has already been postponed until 2018.
Luo started to campaign three days ago and has already reached the minimum threshold — 15 legislators — to raise a discussion. Nonetheless, he will not officially propose the new act before he has the support of over 57 legislators.
If stock income tax is to be eliminated, and transaction tax is reduced to 0.2 percent, as Luo has been promoting, daily stock market transactions could return to NT$160 billion from less than NT$80 billion, said Luo.
However, some KMT legislators consider the abolishing of stock income tax a double-edged sword; therefore, suggestions to freeze the tax for five years were also heard.
The idea of freezing it for five years came about because of difficulties eliminating it during President Ma Ying-jeou’s governance; on the other hand, it could prevent Democratic Progressive Party (DPP) presidential candidate and Chairwoman Tsai Ying-wen ( ) from taking the credit as rumors are that she has already committed to putting an end to stock income tax if she is elected, according to Luo.
In response to Luo’s proposition, the Ministry of Finance (MOF) said that collecting stock income tax is a done deal; so far they have not received any information on freezing it for five years and the MOF considers the act inadequate at the moment.
According to local analysis, if the DPP takes governance in the future and cancels stock income tax, it will allow a few days of promising figures on the stock market, but it will not last too long. The current act only affects stockholders who have an annual transaction of over NT$1 billion, who only make up a small segment of society. In other words, stock income tax is not a factor that holds people back from diving into the market and creating revenue.