Tax and finance representatives yesterday held their first study group meeting on the issue of implementing a capital gains tax on securities investments, but there was no sign they would come to a conclusion any time soon, as the TAIEX continued to fall, dropping to its lowest level in more than two months.
The Ministry of Finance’s task force on taxation and finance yesterday discussed a few options and different directions for the tax’s imposition, while Minister of Finance Christina Liu (劉憶如) said the ministry would schedule another two meetings next week to hear different views on the issues.
At the more than three-hour meeting, most members of the study group generally agreed not to fully and directly impose a tax on individual investors.
“A direct levy on securities income on individuals will have too much of an impact on the local stock market,” Yophy Huang (黃耀輝), an associate professor of taxation at National Taipei College of Business, said at the meeting.
To boost the nation’s tax base, Huang said the government could move to include listed companies in the implementation of the alternative minimum tax (AMT) on securities investments.
Currently, the government only imposes AMT on individual investors in unlisted firms, with the tax deduction limit standing at NT$6 million (US$203,500), the ministry said.
Sun Ke-nan (孫克難), another associate professor of taxation at National Taipei College of Business, and National Taipei University public finance professor Su Jain-rong (蘇建榮) shared Huang’s views.
In addition, the ministry may consider introducing a separate tax rate of 10 percent on individual investors, Huang said, adding that the amount to be taxed could be offset against investors’ losses and the amount of securities transaction tax paid.
As for enterprises, most of the members supported the view that a securities income tax should be imposed, given that the possible impact on enterprises would not be that large.
Liu, who is also the convener of the task force, said the group would not come to any conclusion until the end of next week, but she said the ability-to-pay principle, stabilizing the sources of taxation and promising tax revenue would not be lower than the contribution of current securities taxes, would be three key concepts in the conclusion.
Nonetheless, discussion of a possible capital gains tax continued to spook investors, with the TAIEX falling 1.56 percent, or 121.03 points, to close at 7,639.82 yesterday.
However, Liu said the local market’s downward trend was in line with other major stock markets in the world, indicating she did not link the tumble with uncertainty over a capital gains tax.
However, the group would try to reach a consensus as soon as possible to lower the possible impact on the stock market, Liu added.