Fri, Feb 03, 2012 - Page 12 News List

New finance chief cautious on levying capital gains taxes

LIKE HER MOTHER:The finance minister-designate has learned from her mom, who instituted such a levy in 1988, only to have it rolled back two years later

By Amy Su  /  Staff Reporter

Minister of Finance-designate Christina Liu (劉憶如) said yesterday that the ministry would not make hasty decisions about levying taxes on capital gains, such as income from stock trading, or trading of any kind of asset.

The ministry has no plan to launch the tax anytime soon, Liu said. In 1988, the nation instituted a levy on the gains investors made from securities trading, but the levy was scrapped two years later.

Liu’s mother, Shirley Kuo (郭婉容), was the minister of finance at the time.

Liu’s comments came after the Chinese-language United Evening News yesterday reported that President Ma Ying-jeou (馬英九) had met with her earlier to discuss potential adjustments to the nation’s taxation policies, including the introduction of a capital gains tax.

She said the report was untrue.

“I have not had any chance to meet President Ma [since being appointed], not to mention receiving any instructions from him,” Liu told a media briefing, adding that she had received a phone call from Ma earlier yesterday to schedule a meeting today.

Understanding public expectations should be the first step in addressing tax issues, Liu said.

Therefore, Liu said she would propose the idea when meeting with officials at the Ministry of Finance on Monday to see if it is feasible.

A number of pundits have said that imposing a securities income tax or levying a real-estate income tax on actual prices, two common capital gains taxes, would constitute justice in taxation policies.

In related news, local listed companies called on the government to scrap the 10 percent tax on earnings, which local companies are restricted from distributing to their shareholders.

However, it is difficult to find the “Pareto-optimal” solution in addressing practical tax issues, so a “second best” solution should be acceptable in some cases, Liu said, adding that the levy of a securities transaction tax could be an example of a second-best solution.

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