Taipei, May 14 (CNA) Minister of Finance Christina Liu said Monday that a proposed capital gains tax on stock profits is not the only reason for a recent slump in domestic stock transactions.
Speaking during a presentation to the Legislative Yuan's Finance Committee, Liu pointed out that the Taiwan Securities Exchange has seen dramatic changes in turnover over the last decade and she said that the ministry is hoping to come up with a plan that everyone can accept and that will have a minimum impact on the stock market.
She was responding to questions from several legislators on a year-on-year NT$5.5 billion (US$186.4 million) decrease in stock transaction tax revenue in the first four months of this year.
Daily turnover of NT$70 billion had been quite common over the last 10 years until uncertainties emerged, Liu said. The recent decline in both share prices and turnover could also be attributed to the European debt crisis and other factors, she added.
Previous experience indicates that the market will rebound greatly once the uncertainties are resolved, Liu went on.
She also said that whether the capital gains tax bill can be approved during her term is not the point of the issue, but she expressed hope that it can be passed this year, even though there is little chance that the relevant amendments will be reviewed during the current plenary sitting.
The idea of the tax on stock transaction gains was initiated by Liu after she assumed office Feb. 6, to make good on a pledge by President Ma Ying-jeou to promote tax reform and increase 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 it triggered panic on the local bourse.
Liu's plan were approved by the Executive Yuan, with some revisions, and submitted to the Legislature last month, despite strong opposition from investors concerned that history will repeat itself.
(By Eva Feng and Kendra Lin)