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Scholars pan securities-tax suspension

A proposal to suspend the securities transaction tax is little more than political pandering in the lead-up to the year-end legislative elections, academics say.

Proponents of the one-year suspension say it would rejuvenate the sluggish stock market and bring life back to the economy.

But critics say scrapping the 0.3 percent tax on stock sales would only give a one- or two-day boost to the market -- nothing more.

"The DPP administration seems too willing to bow to pressure from industry leaders," said Norman Yin (殷乃平), a banking and finance professor of National Chengchi University.

"With the elections coming on Dec. 1, many political parties are seeking support in the form of votes or contributions. The DPP is no exception."

Other critics say that with the elections just around the corner, the DPP government is more likely to make politics rather than the needs of the country as its top priority.

"The DPP simply does not respect economics and financial professionalism," said Tseng Chu-wei (曾巨威), a professor of public finance and taxation of National Chengchi University.

As an example, Tseng noted the Cabinet's decision to halve a capital gains tax on property transactions for two years. Although the recent Economic Development Advisory Conference failed to reach a consensus on the issue -- and despite objections that a cut would only benefit wealthy property owners -- the Cabinet has proposed halving the tax anyway.

"There's no point in discussing whether we should or shouldn't suspend the securities transaction tax," the professor said. "The DPP administration has made political considerations its top priority when it comes to the tax cut issue."

Yin said there were many reasons to support keeping the 0.3 percent securities transaction tax in place.

"From both a theoretical and historical point of view, almost everyone knows that cutting the tax rate on securities transactions will do no good for the stock market," Yin said. "The depressed market is mostly due to economic factors. If the administration decides to suspend the securities transaction tax, the only reasonable explanation is that DPP has surrendered to pressure from business interests."
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