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Capital gains tax legislation makes its way to Finance Committee

2012/05/11 19:54:12

Taipei, May 11 (CNA) Controversial legislation to introduce a tax on securities gains was handed over to a legislative committee for review Friday, after ruling Kuomintang (KMT) lawmakers tried to shelve it earlier in the week against the wishes of the KMT-led government.

The legislation, proposed by the Cabinet, and other versions drafted by KMT Legislator Lai Shyh-bao and the People First Party caucus were all submitted to the Finance Committee, where they will be carefully studied and screened.

Legislators made it clear, however, that a final bill would not pass during the current session of the Legislature, which goes on its summer recess at the end of May.

KMT Legislator Lu Shiow-yen, a joint convener of the committee, said she would not rule out the possibility that the committee will hold public hearings on the bill before putting it on the agenda for review.

Lu said great care was needed in reviewing important bills involving the introduction of a new tax, and the committee will want to know what the public thinks before starting the review.

Lu also urged the Executive Yuan, the administrative branch of government that has pushed the measure, to work with lawmakers over the summer recess to come up with a final version of the legislation.

The idea of taxing capital gains on stock transactions was initiated by Finance Minister Christina Liu after she assumed office on Feb. 6 to make good on a pledge by President Ma Ying-jeou to promote tax reform and taxation fairness.

A similar tax was proposed in 1988 when Liu's mother, Shirley Kuo, was finance minister. But the idea was dropped several months later in 1989 after triggering panic in the Taipei stock market.

With President Ma Ying-jeou's support, Liu's office drafted a package of amendments to impose the capital gains tax.

They were then approved by the Executive Yuan, with some revisions, and submitted to the Legislature last month, despite the strong opposition of investors, who worried that history would repeat itself.

The KMT legislative caucus proposed Wednesday to shelve the proposed amendments for the time being, contending that lawmakers had too many other priority bills to get to, including on the controversial issue of easing restrictions on imports of U.S. beef.

The move, however, triggered media speculation of a major rift in the ruling party between its lawmakers and the administration, and the KMT legislators backed off their position.

Now that the draft amendments have entered the legislative process, as was requested by President Ma, who doubles as KMT chairman, KMT Legislator Lin Hung-chih urged the administration to step up communications with lawmakers in search of a consensus on the issue.

Lin, who heads the party's policy coordination committee, said, however, that no legislation on the issue would be passed during the body's current session.

(By Sherry Tang and Elizabeth Hsu)