Chinese Nationalist Party (KMT) Legislator Tseng Chu-wei (曾巨威) yesterday introduced his own version of the securities and futures tax, one day after the Ministry of Finance (MOF) announced its proposed draft bill.
Tseng, who is also a professor of finance at National Chengchi University, said his proposal would be more in line with the “ability-to-pay” principle, as well as the spirit of fairness and justice.
Tseng said he would seek support from other lawmakers in getting his version passed.
Two members of a ministry-based task force on taxation and finance — Anti-Poverty Alliance convener Chien Hsi-chieh and Sun Ke-nan (孫克難), an associate professor of taxation at National Taipei College of Business — voiced support for Tseng’s plan.
“Since most of the members reached a consensus on fully and directly imposing a securities tax on institutional investors, the ministry should not keep the structure of the current alternative minimum tax [AMT] as in its version,” Sun told a media briefing.
“I will definitely refuse to endorse the ministry’s draft version,” Chien said.
On Thursday night, the ministry announced a proposal to levy a 20 percent tax on individual investors who make more than NT$3 million (US$101,600) in annual securities gains, as well as a 12 percent tax on domestic institutional investors if their holdings of stock, futures and options increase by more than NT$500,000 a year.
The differences between Tseng’s and the ministry’s proposal involved both institutional and individual investors.
Under Tseng’s proposal, institutional investors would pay 17 percent tax on their securities and futures profit, the same rate as the business income tax, while the amount to be taxed could be offset against losses.
For individual investors, his plan is for them to combine their securities and futures profits, with a progressive tax rate between 5 percent and 40 percent, the same as the income tax rate.
Only those who sell initial public offering (IPO) investments for the first time after the listing or earn more than NT$3 million before including securities investments would declare their securities profits and be taxed under Tseng’s plan.
People earning less than NT$500,000 without counting in securities investments, but making at least NT$50 million in securities transactions a year, would also be included in the list.
Tseng said his proposal would ensure that all of the so-called “accredited investors” would pay the securities income tax they deserve.
To encourage long-term investments, individual and institutional investors that hold their investments for more than two years, could deduct half their profits under Tseng’s plan, compared with the five-year deal set by the ministry.
Meanwhile, KMT Legislator Lai Shyh-bao (賴士葆) backed the ministry’s proposal, saying it would not affect 80 percent of retail investors in the market while taxing those who make more profits.
“However, there are some details that need to be discussed,” Lai said. “For example, it is worth discussing whether the tax rate could be cut in half if investors hold stocks for more than five years or whether it’s necessary to lower the security transaction tax when a securities tax is put in place,” he said.
KMT Legislator Lo Ming-tsai (羅明才) said imposing a securities tax would be a great inconvenience and suggested increasing the 0.3 percent security transaction tax by 0.1 percent, which he said would generate an additional tax revenue of NT$40 billion annually.