Wed, Jul 21, 2004 - Page 10 News List

Lin says no capital gains tax for a while

CONTROVERSIAL IDEA The finance minister said his ministry has no timetable for introducing such a tax, the mere suggestion of which toppled two predecessors

By Joyce Huang  /  STAFF REPORTER

One of the government's long-term goals is to introduce a capital-gains tax on stocks but it has not decided on a timetable for doing so, Minister of Finance Lin Chuan (林全) said yesterday.

In a move to ease investors' concerns over the proposed tax, Lin told a press conference that his ministry had not discussed the proposal since it was placed on the long-term agenda for the nation's tax-reform plan formulated last January.

"The controversial tax proposal enjoys no priority and the ministry has no plan to deal with the issue within the next six to nine years," he said.

Both Vice Minister of Finance Gordon Chen (陳樹) and Lin Tseng-ji (林增吉), director-general of the ministry's Taxation Department, told reporters earlier yesterday that "the ministry has not ruled out the possibility of putting forward the proposal ahead of schedule."

Chen said after a seminar yesterday morning that the ministry "may place the tax proposal on the tax scheme's short-term agenda if a consensus can be formulated."

Last year the ministry placed tax proposals that are planned to be implemented in the next two years on its short-term agenda while placing those planned to be dealt with in the next seven to 10 years on a long-term agenda, he said.

Lin stressed that the media had misinterpreted his subordinates' remarks.

"No new policies to hike taxes will be launched as a sudden shock to negatively impact the market before any consensus is reached," he said.

Investors, however, took the various pronouncements, as well as media reports of military threats from China, negatively, sending the TAIEX down by 163.42 points to 5,325.68 on turnover of NT$62.95 billion.

"The finance ministry has denied that it would re-impose the capital gains tax now, and with such low trading momentum, we do not expect the ministry to take such action in the foreseeable future," George Lai, an analyst at SinoPac Securities Co (建華證券), wrote in a market letter yesterday.

"The government seems to be very itchy to raise money. There-fore, this new tax may possibly be imposed within a year," he said

Lin was an advocate of a capital-gains tax in 2000 before he joined President Chen Shui-bian's (陳水扁) administration. When he took over the ministry in December 2002, market watchers speculated that he might push for the tax, which had toppled two predecessors, including Shirley Kuo (郭婉容) in 1989, when the TAIEX fell for a 19 consecutive days -- from 8,000 to 4,763, a plunge of more than 40 percent.

The tax proposal has been an untouchable idea for most finance ministers for the past 15 years.

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