The Alliance for Fair Tax Reform yesterday criticized the Chinese Nationalist Party (KMT) caucus’ draft bill for a capital gains tax on securities transactions, saying it completely lacked the “ability-to-pay” principle.
The KMT version provided more evidence that President Ma Ying-jeou (馬英九) may fail to keep his campaign promise to pursue a fairer tax system and social justice, the alliance said.
“The proposal by the KMT caucus has been the ‘worst version’ among all current drafts,” alliance convener Wang Jung-chang (王榮璋) told a press conference.
Photo: Chu Pei-hsiung, Taipei Times
His comments came a day after Minister of Finance Christina Liu (劉憶如) tendered her resignation to show her unhappiness with the KMT lawmakers’ tax proposal.
Wang said no other countries in the world impose a capital gains tax on securities transactions with a link to the benchmark index.
Under the KMT’s proposal, corporations would be taxed under the Alternative Minimum Tax (AMT) rule, while individual investors would be able to choose one of two options at the beginning of the year — to include stock gains as part of their annual income, or to pay more securities transactions taxes when the TAIEX is higher than 8,500 points.
Fluctuations in the index are unrelated to investors’ gains or losses, Wang said, adding that people may still make profit from stock investments even when the TAIEX moves below the 8,500 mark.
The KMT’s proposal is little more than a slight increase in the securities transaction tax, not a plan to tax capital gains, he said.
Neither the KMT nor Democratic Progressive Party (DPP) has showed much determination to launch tax reform, the alliance said.
“We have not yet seen the DPP play an important role in the tax reforme,” Wang said.
Chien Hsi-chieh, convener of the Anti-Poverty Alliance, agreed.
“The KMT proposal would be a big victory for the rich and business groups with vested interests,” Chien said.
Taiwan Labor Front secretary-general Son Yu-lian (孫友聯) warned of a backlash from salaried workers if the Ma administration continues to promote what he described as a “fake capital gains tax.”
Meanwhile, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) chairman Morris Chang (張忠謀) yesterday lambasted the government for what he said was a hasty decision to impose a capital gains tax and the timing of the move.
Chang also said he strongly opposed the Ministry of Finance’s tax proposal, approved by the Cabinet last month, to raise the minimum corporate income tax from 10 percent to 12 percent.
The corporate income tax hike is part of the ministry’s draft to resume a capital gains tax.
The government should make a separate proposal to hike minimum corporate income tax, Chang told reporters.
“We do not trade stocks [to make profits]. We have nothing to do with the capital gains tax,” he said.
TSMC would have to pay an additional NT$3 billion (US$101.8 million) in tax next year based on the ministry’s tax proposal, he said.
Additional reporting by Lisa Wang
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