Hung’s pro­posed stock gain tax re­form puts tax­a­tion back at the start­ing line

The China Post - - LOCAL - BY ENRU LIN

Kuom­intang ( KMT) pres­i­den­tial con­tender Hung Hsiu-chu ( ) yesterday rolled out the latest plank of her cam­paign: a re­form plan for tax­a­tion on stock sales.

The plan can­cels a clause that ex­empts for­eign in­sti­tu­tional in­vestors from be­ing taxed on cap­i­tal gains tax from trad­ing — a step to­ward fair tax­a­tion, she said. It pro­poses that all traders are taxed 0.05 per­cent on any cap­i­tal gains from trad­ing in se­cu­ri­ties, plus another 0.25 per­cent on all stock trans­ac­tions. Yiin Chii-ming ( ), pres­i­dent of the KMT’s Na­tional Pol­icy Foun­da­tion ( ), said Hung’s plan would build a new frame­work for Tai­wan that would both in­crease turnover and stim­u­late tax rev­enue.

Hung is propos­ing re­form in the sense that she is pledg­ing tax on pre­vi­ously un­taxed cap­i­tal gains, though in ef­fect what she aims to do is break down a cur­rent tax into two parts: The tax code to­day im­poses a 0.3-per­cent tax on all stock trans­ac­tions.

What Hung has re­ally pro­posed is a clever way to side­step the po­lit­i­cal prob­lem of the 15-per­cent cap­i­tal gains tax on ma­jor mar­ket play­ers.

Af­ter years of leg­isla­tive de­bate, the Fi­nance Min­istry’s stock gains tax on large-scale in­vestors fi­nally passed third read­ing in 2013. Shortly there­after, in a fit of re­gret pro­voked mainly by in­vestor pres­sure, Leg­is­la­ture im­posed a mora­to­rium on the tax, which is now sched­uled to come into force three years late in 2018.

Un­der that cap­i­tal gains tax, traders who sell more than NT$1 bil­lion of shares on the lo­cal mar­ket each year would have to pay ei­ther a 15 per­cent tax on stock gains or an ex­tra 0.1 per­cent tax on trans­ac­tions in ex­cess of the NT$1 bil­lion thresh­old.

Ac­cord­ing to the Fi­nance Min­istry, the tax could gen­er­ate an ex­tra NT$1.49 bil­lion in tax rev­enue each year from ma­jor mar­ket play­ers, in the spirit of fair tax­a­tion and re­form.

Hung’s tax scheme was re­port­edly formed and pitched to her by many of those same law­mak­ers, who also plan to process it in the com­ing leg­isla­tive ses­sion. If ap­proved, it elim­i­nates the 15-per­cent stock gains tax — also in the spirit of re­form and fair tax­a­tion. Once in ef­fect, tax­a­tion on stock gains will re­main the same as it is to­day for the ma­jor­ity of traders on the lo­cal mar­ket.

The Demo­cratic Pro­gres­sive Party has, on the one hand, charged Hung of es­pous­ing a tax scheme first pro­posed by the party in 2012, and on the other ac­cused Hung of of­fer­ing “false re­form.”

Both com­pet­ing claims are true. For over 10 years now, both ma­jor par­ties have at­tempted to “re­form” the tax­a­tion sys­tem on stock gains, so far to no real re­sults.

Newspapers in English

Newspapers from Taiwan

© PressReader. All rights reserved.