The road ahead for tax reform in Taiwan looks bumpy following the resignation of Minister of Finance Christina Liu (劉憶如), tax academics said yesterday.
“I expect no more tax reform in the next four years,” National Taiwan University economics professor Kenneth Lin (林向愷) said by telephone.
Lin, who is also a friend of Liu, was not surprised at Liu’s resignation.
Lin said he knew the Cabinet-proposed draft bill of imposing a capital gains tax on securities transactions would fail to gain support as Liu had expected, because Liu did not let the Ministry of Finance-based task force on taxation and finance play an important role in policy decisionmaking.
“The ministry should bring its own draft to the task force for further discussion, instead of only listening to task force members’ opinions and then formulating its own proposal,” said Lin, a former member of the task force who withdrew from the group in the middle of last month.
Lin said the latest version proposed by Chinese Nationalist Party (KMT) lawmakers indicated the party wanted to force Liu to quit as finance minister.
Liu’s resignation provided more evidence that neither the task force nor the KMT’s tax reform plan would make progress in the near future, he said.
Wang Jung-chang (王榮璋), the convener of the Alliance for Fair Tax Reform (公平稅改聯盟), said the KMT’s latest proposal was a version that allied with business groups and the rich and failed to fulfill the spirit of the ability-to-pay principle.
“Any professional with a conscience would not be able to accept this [KMT version],” Wang said of Liu’s resignation. “I do not think Liu had other choices.”
Liu stepping down could also be an indication that both President Ma Ying-jeou (馬英九) and Premier Sean Chen (陳冲) supported the KMT proposal and if the legislature passes it, Wang said he does not think the government will continue other reforms.
“[I feel] sad [about the results],” Wang said.
Liu showed her ambition to reform the tax system by forming the 16-member task force in March and choosing six issues — three related to taxation and three related to finance — as the first topics to be discussed and solved. Implementing some form of capital gains tax was foremost of the six issues.
Lin and Wang said that Liu’s resignation would make it more difficult to convince the public that the government is serious about tax reform.
Nan Shan Life Insurance Co (南山人壽) vice chairman Du Ying-tzyong (杜英宗) said it showed uncertainty in government policymaking.