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Hot money tax will only be possible after cautious assessment: FSC

2010/10/14 19:27:38

Taipei, Oct. 14 (CNA) Financial Supervisory Commission (FSC)Chairman Chen Yuh-chang said Thursday that the government will onlylevy a hot money tax after careful consideration to avoid anyundesirable impact, especially on the local bourse.

With a continued inflow of foreign capital, the New Taiwan dollarclimbed by up to NT$0.4 against the greenback in the morning sessionof the Taipei foreign exchange Thursday, triggering an outcry fromlawmakers asking whether Taiwan should follow in Brazil's footstepsby imposing a hot money tax in a bid to curb foreign exchangespeculation.

Legislator Kao Chih-peng of the opposition Democratic ProgressiveParty, at a session of the Legislative Yuan's Finance Committee,asked whether the FSC will work with the Ministry of Finance on theproposed tax, a hotly debated issue after Central Bank of theRepublic of China Governor Perng Fai-nan quoted Nobel economicslaureate Joseph Stiglitz as noting that Brazil's move to levy a hotmoney tax was a means to curb the inflow of speculative capital.

In response, the Ministry of Finance said that if necessary, itwill cooperate with relevant agencies to work out measures forlevying the tax.

According to Kao, a hot money tax would be a double-edged swordand that the local foreign exchange and stock markets will be deeplyinfluenced if it is imposed.

For his part, Chen pointed out to the lawmakers that Perng hasnot actually proposed the tax. He also said the FSC will insist thatit should only be levied after prudent consideration.

(By Hsieh Chun-wei & Bear Lee)