Industrial and financial leaders yesterday stepped up protests against a plan to tax capital gains on securities investments, asking the government to rescind the bill and call a national affairs conference to discuss fiscal enhancement measures.
The plea came hours after President Ma Ying-jeou’s (馬英九) re-inauguration ceremony.
The leaders said Ma should first seek to secure free-trade agreements with major trade partners to boost Taiwan’s competitiveness on the world stage.
“We decided to press our case [yesterday] to help the president start his second term the right way,” Chinese National Federation of Industries (全國工業總會) chairman Rock Hsu (許勝雄) said.
The slump in share prices and dwindling turnover is jeopardizing the health of the local bourse, through which companies raise funds to finance equipment purchases and expansions, Hsu said.
Falling liquidity will dampen foreign companies’ willingness to list on the local market, negating the Taiwan Stock Exchange Corp’s (台灣證交所) efforts to encourage listing, Hsu said.
“The government should be content with current taxes related to securities investments, as these have generated negative returns in recent years,” Hsu said.
The return of financial turmoil in the eurozone should merit reconsideration of tax reform, let alone a capital gains tax on securities transactions, General Chamber of Commerce chairman Lawrence Chang (張平沼) said.
While the Ministry of Finance insists the tax plan would affect only 10,000 to 20,000 investors, it fails to take into consideration that the bigger players are influential in setting the market’s direction, Chang said.
Individual investors, who account for 65 percent of overall trade, are taking their cues from them and staying on the sidelines these days, Chang said.
As a result, state coffers may see securities transactions tax decline by between NT$50 billion (US$1.69 billion) and NT$60 billion a year, more than cancelling out an estimated NT$10 billion increase from the proposed capital gains levy, Chang said.
“I don’t see how the government can advance social justice with a shrinking treasury,” Chang said.
He urged the legislature to halt the review of the legislation to calm public jitters linked to the tax reform.
Taiwan Electrical and Electronic Manufacturers Association (電電公會) chairman Arthur Chiao (焦佑鈞) said the government will need funds to prop up sectors that are hurt by free-trade agreements (FTAs) and should therefore avoid measures that could weaken its capacity to provide subsidies.
“The government seems to underestimate the impact of the capital gains tax plan,” Chiao said.
David Chang (張大為), vice chairman of the National Association of Small and Medium Enterprises (中小企業協會) said the government should consult industrial representatives before formulating major policies such as a capital gains tax to avoid polarizing society.
Sentiment against the rich is building as the government portrays those with different views as blocking fairness and social justice, he said.
“That is not healthy for social harmony or progress,” David Chang said.