Taipei, May 25 (CNA) Business leaders said Friday a proposed tax on gains from stock trades has had a negative impact on capital markets, and they hoped the government would hold back the tax for the time being.
Chang Pen-tsao, chairman of the general Chamber of Commerce of the Republic of China, said the government should set priorities when pushing various polices.
"The tax on gains on stock trades is not urgent, but it has already affected capital markets," Chang said on the sidelines of a meeting of the Taiwan Electrical and Electronic Manufacturers' Association (TEEMA).
He noted that since the proposed tax was first reported, the market value of the local bourse has fallen by NT$2 trillion (US$67.51 billion).
"Businesses are not opposing to the tax, but the timing is not right," Chang said, without saying when the timing would be right.
From March 28, when a task force first met to discuss a possible capital gains tax on stock transactions, Taiwan's benchmark index has fallen 11.36 percent, in line with other regional markets.
The Hang Seng Index in Hong Kong has fallen 10.62 percent over that time, the Kospi Composite Index in Seoul has slid 10.69 percent, and the Nikkei 225 Index in Tokyo has declined 15.90 percent.
TEEMA Chairman Arthur Chiao echoed Chang's words, saying that the government is currently "pushing many policies, and the proposal does not have to be so rushed."
Chang also said that with capital markets currently in a slump, "it was unwise for the government" to hurt the market further by proposing a tax that will only add NT$10 billion in revenue to national coffers.
Meanwhile, Finance Minister Christina Liu said Friday when calling on legislators to solicit support for the plan that had she known that fuel and electricity rates would also be hiked, she would have held back on pushing a capital gains tax on stock investments.
She noted that the ministry worked out a schedule to discuss and promote the tax on March 28, but it did not learn of the price hikes until April 5.
Addressing the criticism by Hon Hai Group Chairman Terry Gou that the government needs not pay such a big price for just NT$10 billion in tax revenues, Liu said the total was no small matter.
Liu said it would be enough to raise the deduction on salary for taxpayers to NT$130,000 from the present NT$104,000.
The deduction for raising small children could also be raised to NT$100,000 from the present NT$25,000, which could "greatly lessen the burden of taxpayers," Liu said.
Legislator Lu Shiow-yen of the ruling Kuomintang (KMT) and a convener of the Finance Committee said KMT legislators have come up with their own version of the capital gains tax proposal, and if the committee reaches a bipartisan consensus when it is screened on June 4, the bill could pass within this session.
The lawmakers earlier agreed that this session will be extended from the end of May until June 15.
(By Chen Wei-ting and Lilian Wu)