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Talk of the Day -- Fate of capital gains tax remains uncertain

2012/04/27 23:02:28

The Executive Yuan has unveiled a draft package of regulations on levying stock capital gains tax. The terms are more lenient to stock investors than those initiated by the Ministry of Finance, but the bill still meets strong opposition from lawmakers across the political spectrum.

Ruling Kuomintang legislators have come up with three different versions for the new levy and the opposition People First Party's legislative caucus has also drafted its own version of amendments.

With ruling party lawmakers remain far divided over the issue, main opposition Democratic Progressive Party legislative whip Ker Chien-ming said Thursday that he is pessimistic about the fate of the Cabinet-drafted bill.

KMT Legislator Lin Hung-chih, who concurrently serves as the party's chief policy coordinator, shared Ker's view, saying that the executive branch needs to step up communications with KMT lawmakers to narrow their differences and seek their support for the Cabinet's stance.

The Legislature is not expected to begin screening the Cabinet-endorsed bill until November, Lin said, adding that the Cabinet version may be subject to further revisions during legislative deliberation.

The following are excerpts from the local media coverage of pros and cons of the capital gains tax initiative:

Commercial Times:

KMT Legislator Lu Shiow-yen said Taiwan's stock trading volumes have slumped significantly since a government task force started talks about levying capital gains tax on securities transactions in mid-March.

Over the past five years, the daily local share trading volume ranged between NT$120 billion (US$4.08 billion) and NT$170 billion, and the amount also reached around NT$130 billion in the first two months of this year, Lu said.

"The daily trading volume, however, has declined by NT$40 billion between March and April," Lu said, adding that local stock market capitalization has shed NT$1.6 trillion since mid-March.

Lu said she is worried that if the capital gains tax controversy remains unsettled, local share trading volume could slip further or even enter a "glacier age."

Wu Tang-chieh, vice chairman of the Financial Supervisory Commission, also said earlier this week that share-trading volumes have fallen since March 28 when the Finance Ministry panel held its first discussion on the capital gains tax proposal.

An average 1.9 billion stocks changed hands each day since March 28, lower than the average daily volume of 2.7 billion for the whole of 2012, according to Taiwan Stock Exchange statistics.

Wu said his commission will work hard to minimize the impact of the tax proposal on the market.(April 27, 2012).

United Evening News:

At the request of the KMT legislative caucus, the Executive Yuan has decided not to hastily send its newly passed capital gains tax package to the Legislature for screening and approval because KMT lawmakers have not yet reached a consensus on the issue, party sources said Friday.

Executive Yuan Secretary-General Lin Yi-shih said the administration will consult with KMT lawmakers because the new version contains some changes in comparison with the Finance Ministry-drafted scheme.

"We'll do our best to seek lawmakers' support for our version," Lin said, adding that the Executive Yuan is not likely to change terms outlined in its newly finalized package.

Some KMT lawmakers said it's almost unlikely for the party's legislative caucus to chalk out a unified stance on the issue. Several of them even predicted that the controversial capital gains tax bill may be shelved or abandoned eventually. (April 27, 2012).

(By Sofia Wu)
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