The nation’s securities and futures houses yesterday remained dissatisfied with the government’s revised plan to tax capital gains on securities and futures investments, and said they would seek recourse with lawmakers to prevent its enactment.
“We find the latest version disappointing, because it fails to ease concerns over potential fund outflows and shrinking trading volumes linked to the imposition of the capital gains tax,” Taiwan Securities Association (TSA, 證券公會) chairman Hwang Min-juh (黃敏助) said yesterday.
Turnover on the stock market remained low at NT$68.78 billion (US$2.33 billion) yesterday, with the TAIEX shedding 0.55 percent at the close, Taiwan Stock Exchange data showed.
Investors will not keep their funds in Taiwan simply because the Ministry of Finance raised the tax exemption amount to NT$4 million, from the previous NT$3 million, Hwang said, adding that securities investments in Singapore and Hong Kong are not subject to a capital gains tax.
The association insisted that the ministry lower or scrap the securities transaction levy if it taxes capital gains. It said the securities transaction tax, currently at 0.3 percent of the trading amount, is equivalent to levies ranging from 42 percent to 150 percent of capital gains for investments with varied returns.
The association urged lawmakers to reject the Cabinet’s tax proposal and maintain the “status quo,” or consult the association’s draft if the legislature intends to proceed with the tax reform.
The association’s draft calls for merging the capital gains tax into a 10 percent minimum income tax, which would apply to institutional stock investments in both listed and unlisted companies, with the exemption threshold at NT$2 million. The tax rate should be halved for share holdings of two years and longer, the draft said.
Individual investors, foreign or domestic, should be exempt from any capital gains tax until institutional players account for more than 50 percent of daily turnover, from the present 30 percent, the association said.
Likewise, futures companies said they would take their case to the legislature now that the Cabinet has sided with the Ministry of Finance.
“It is both confusing and unfair to subject institutional players to capital gains tax on futures investments, but exempt all individual participants from the planned levy,” Lu Ting-chieh (盧廷劼), secretary-general of the Chinese National Futures Association (期貨公會), said by telephone.
Futures investments, intended to hedge against losses in spot securities, transcend borders and investor identities, said Lu, who was chief secretary at the Financial Supervisory Commission in 2009-2010 when Premier Sean Chen (陳冲) served as the commission’s chairman.
The association stands by its earlier plea that the government either taxes futures transactions or capital gains, but not both, Lu said.
Several social groups also said yesterday they would not accept the Cabinet’s proposal of the securities gains tax, as this version breaks the “ability to pay” principle.
“The Cabinet’s proposal was a huge frustration for Minister of Finance Christina Liu (劉憶如),” said the convener of the Alliance for Fair Tax Reform (公平稅改聯盟), Wang Jung-chang (王榮璋).
The proposal indicated that either the Cabinet or President Ma Ying-jeou (馬英九) was not backing Liu, Wang added.
Wang said the version was too compromising to be agreed to by the salaried classes, who pay a consolidated income tax, and will deepen society’s hostility toward the rich.
If the government failed to tax securities gains, it will be difficult to convince people that upcoming tax reformation, such as capital gains tax on land investments, would be able to go further, Wang added.
“If the government always compromises to suit the rich, President Ma will fail to fulfill his campaign promises,” Wang said.
Meanwhile, civic groups also said the Taiwan Securities Association’s move to oppose the tax would block tax reformation and hurt the nation’s progress.
“If rich people earning money from the asset market do not need to be taxed, why should salarymen pay income tax?” Taiwan Labor Front (台灣勞工陣線) secretary-general Son Yu-lian (孫友聯) said.
In response to the securities representatives’ threat to initiate a public protest next month, civic groups said they would not rule out doing the same during the tax declaration period.
Convener of the Anti-Poverty Alliance (反貧困聯盟) Chien Hsi-chieh (簡錫堦) said he expects Liu to hang on in the upcoming wars in the Legislature.
“I think the current pressure raised by business heavyweights has isolated her,” Chien said.
However, Chien said he believes Liu’s stand would go down in history.
The Chinese National Federation of Industries (工商協進會), which had a meeting with Chen and Cabinet ministers on Wednesday, said it needed more time to form an opinion, adding that more business leaders in the industrial and commercial sectors would meet with Minister of Finance Christina Liu this afternoon to gain a better understanding of the issue.
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
A proposed 100 percent tariff on chip imports announced by US President Donald Trump could shift more of Taiwan’s semiconductor production overseas, a Taiwan Institute of Economic Research (TIER) researcher said yesterday. Trump’s tariff policy will accelerate the global semiconductor industry’s pace to establish roots in the US, leading to higher supply chain costs and ultimately raising prices of consumer electronics and creating uncertainty for future market demand, Arisa Liu (劉佩真) at the institute’s Taiwan Industry Economics Database said in a telephone interview. Trump’s move signals his intention to "restore the glory of the US semiconductor industry," Liu noted, saying that
STILL UNCLEAR: Several aspects of the policy still need to be clarified, such as whether the exemptions would expand to related products, PwC Taiwan warned The TAIEX surged yesterday, led by gains in Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), after US President Donald Trump announced a sweeping 100 percent tariff on imported semiconductors — while exempting companies operating or building plants in the US, which includes TSMC. The benchmark index jumped 556.41 points, or 2.37 percent, to close at 24,003.77, breaching the 24,000-point level and hitting its highest close this year, Taiwan Stock Exchange (TWSE) data showed. TSMC rose NT$55, or 4.89 percent, to close at a record NT$1,180, as the company is already investing heavily in a multibillion-dollar plant in Arizona that led investors to assume
AI: Softbank’s stake increases in Nvidia and TSMC reflect Masayoshi Son’s effort to gain a foothold in key nodes of the AI value chain, from chip design to data infrastructure Softbank Group Corp is building up stakes in Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the latest reflection of founder Masayoshi Son’s focus on the tools and hardware underpinning artificial intelligence (AI). The Japanese technology investor raised its stake in Nvidia to about US$3 billion by the end of March, up from US$1 billion in the prior quarter, regulatory filings showed. It bought about US$330 million worth of TSMC shares and US$170 million in Oracle Corp, they showed. Softbank’s signature Vision Fund has also monetized almost US$2 billion of public and private assets in the first half of this year,
RSS