Securities transaction tax revenue may fail to reach its budgeted allocation of NT$126.5 billion (US$4.23 billion) this year after posting a 20 percent year-on-year decline in the first five months, the Ministry of Finance said yesterday.
Revenue from the securities transaction tax totaled NT$33.2 billion in the first five months, down NT$8.3 billion from the same period the previous year, marking the sharpest fall among all tax revenues, the ministry said in its monthly report.
“Turnover on the nation’s stock market has been slowing over the last few months, further dragging down revenue from the securities transaction tax,” Hsu Ray-lin (許瑞琳), deputy director of the ministry’s statistics department, told a press conference.
Daily turnover on the Taiwan Stock Exchange and over-the-counter markets totaled NT$83 billion for last month, down 32.9 percent from a year earlier.
Trading momentum in the stock market began contracting after the ministry proposed a capital gains tax on securities transactions in late March.
The daily turnover cooled to an average of NT$87.2 billion in April — from NT$117 billion daily average recorded in March — and further slowed last month, the statistics showed.
Hsu attributed the contracting turnover mainly to continuing uncertainty about the global economy, led by the eurozone’s debt problem.
Domestic issues, mainly driven by the controversial proposal of imposing a capital gains tax on securities transactions, also spooked investors’ and dragged down turnover, Hsu added.
It might be very difficult for the securities transaction tax revenue to reach its budgeted goal, as the government set it based on an expected average daily turnover of about NT$160 billion.
However, the ministry still hopes the nation’s overall tax revenue will be bolstered by increased takings from corporation tax and individual income tax.
“Revenue from income tax should take its direction from economic conditions a year ago, so we expect last year’s relatively better economy to drive up this year’s income tax revenue,” Hsu said.
Tax revenues rose 8 percent from a year earlier to NT$304.9 billion last month, making tax revenues in the first five months NT$703.2 billion, up 2.9 percent year-on-year, ministry data showed.