Lin Chuan faces reforms

Minister of Finance Lin Chuan (林全) was sworn into office yesterday. He vowed to follow through on financial and tax reforms while minimizing its impact on society and markets.

"[Financial] reforms will not be stopped, since they concern the nation's future competitiveness," Lin said during a press conference after the ceremony.

Lin said that he would soon solicit legislative support and push for passage of the proposed NT$1.05 trillion Financial Restructuring Fund (金融重建基金) to lower the banking sector's non-performing-loan rate.

He, however, shrugged off reporters' questions seeking clarification on changes to reform policies, saying he needs more time to study current plans and find a balance between short-term spending and long-term financial and fiscal stability.

Despite the central government's growing deficit, Lin, said he would not raise taxes -- including a new capital-gains tax on securities trading profits (證券所得稅) -- in line with President Chen Shui-bian's (陳水扁) campaign promises.

Lin, a tax expert, helped formulate Chen's financial white paper in early 2000 before he was elected president. The paper proposed levying a tax on capital gains. The controversial proposal, however, panicked so many stock investors that Chen had to publicly announce that he would not raise taxes if elected.

Following Lin's appointment last Thursday, the media has pushed for answers as to whether he will pursue his former proposal and introduce the tax.

But Lin yesterday gave a clear-cut answer: No.

"It's a long-term ideal that requires medium and-short term support measures to facilitate," Lin said. "For the time being, we have no plans to levy the tax."

Lin also emphasized the importance of talent.

"Human capital is the [ministry's] most precious asset ... I have no plan to reshuffle the ministry in the near future," Lin said.

The Executive Yuan, meanwhile, has given the finance ministry the green light to push for legal revisions to reduce the rice-wine tax in the upcoming legislative sessions before re-opening negotiations with Taiwan's WTO trade partners.

"In a move to combat bootleg wine, rice-wine prices may drop to between NT$60 and NT$50 [per 0.6-liter bottle] after the revisions are passed as early as January," Vice Minister of Finance Sam Wang (王得山) said at the press conference.

Taxation on distilled wine will be revised and set by retail price rather than by quantity, in accordance with Taiwan's WTO agreement, he said.