The nation’s securities and futures houses yesterday remained dissatisfied with the government’s revised plan to tax capital gains on securities and futures investments, and said they would seek recourse with lawmakers to prevent its enactment.
“We find the latest version disappointing, because it fails to ease concerns over potential fund outflows and shrinking trading volumes linked to the imposition of the capital gains tax,” Taiwan Securities Association (TSA, 證券公會) chairman Hwang Min-juh (黃敏助) said yesterday.
Turnover on the stock market remained low at NT$68.78 billion (US$2.33 billion) yesterday, with the TAIEX shedding 0.55 percent at the close, Taiwan Stock Exchange data showed.
Investors will not keep their funds in Taiwan simply because the Ministry of Finance raised the tax exemption amount to NT$4 million, from the previous NT$3 million, Hwang said, adding that securities investments in Singapore and Hong Kong are not subject to a capital gains tax.
The association insisted that the ministry lower or scrap the securities transaction levy if it taxes capital gains. It said the securities transaction tax, currently at 0.3 percent of the trading amount, is equivalent to levies ranging from 42 percent to 150 percent of capital gains for investments with varied returns.
The association urged lawmakers to reject the Cabinet’s tax proposal and maintain the “status quo,” or consult the association’s draft if the legislature intends to proceed with the tax reform.
The association’s draft calls for merging the capital gains tax into a 10 percent minimum income tax, which would apply to institutional stock investments in both listed and unlisted companies, with the exemption threshold at NT$2 million. The tax rate should be halved for share holdings of two years and longer, the draft said.
Individual investors, foreign or domestic, should be exempt from any capital gains tax until institutional players account for more than 50 percent of daily turnover, from the present 30 percent, the association said.
Likewise, futures companies said they would take their case to the legislature now that the Cabinet has sided with the Ministry of Finance.
“It is both confusing and unfair to subject institutional players to capital gains tax on futures investments, but exempt all individual participants from the planned levy,” Lu Ting-chieh (盧廷劼), secretary-general of the Chinese National Futures Association (期貨公會), said by telephone.
Futures investments, intended to hedge against losses in spot securities, transcend borders and investor identities, said Lu, who was chief secretary at the Financial Supervisory Commission in 2009-2010 when Premier Sean Chen (陳冲) served as the commission’s chairman.
The association stands by its earlier plea that the government either taxes futures transactions or capital gains, but not both, Lu said.
Several social groups also said yesterday they would not accept the Cabinet’s proposal of the securities gains tax, as this version breaks the “ability to pay” principle.
“The Cabinet’s proposal was a huge frustration for Minister of Finance Christina Liu (劉憶如),” said the convener of the Alliance for Fair Tax Reform (公平稅改聯盟), Wang Jung-chang (王榮璋).
The proposal indicated that either the Cabinet or President Ma Ying-jeou (馬英九) was not backing Liu, Wang added.
Wang said the version was too compromising to be agreed to by the salaried classes, who pay a consolidated income tax, and will deepen society’s hostility toward the rich.
If the government failed to tax securities gains, it will be difficult to convince people that upcoming tax reformation, such as capital gains tax on land investments, would be able to go further, Wang added.
“If the government always compromises to suit the rich, President Ma will fail to fulfill his campaign promises,” Wang said.
Meanwhile, civic groups also said the Taiwan Securities Association’s move to oppose the tax would block tax reformation and hurt the nation’s progress.
“If rich people earning money from the asset market do not need to be taxed, why should salarymen pay income tax?” Taiwan Labor Front (台灣勞工陣線) secretary-general Son Yu-lian (孫友聯) said.
In response to the securities representatives’ threat to initiate a public protest next month, civic groups said they would not rule out doing the same during the tax declaration period.
Convener of the Anti-Poverty Alliance (反貧困聯盟) Chien Hsi-chieh (簡錫堦) said he expects Liu to hang on in the upcoming wars in the Legislature.
“I think the current pressure raised by business heavyweights has isolated her,” Chien said.
However, Chien said he believes Liu’s stand would go down in history.
The Chinese National Federation of Industries (工商協進會), which had a meeting with Chen and Cabinet ministers on Wednesday, said it needed more time to form an opinion, adding that more business leaders in the industrial and commercial sectors would meet with Minister of Finance Christina Liu this afternoon to gain a better understanding of the issue.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his