Vice Minister of Finance William Tseng (曾銘宗) yesterday said the government would lose NT$32 billion (US$1.07 billion) a year in tax revenues if it lowered the stock transaction tax rate by 0.1 percent.
The Ministry of Finance is therefore cautious about cutting the tax, Tseng said, following reports that Chinese Nationalist Party (KMT) Legislator Lu Shiow-yen (盧秀燕) plans to propose a rate reduction.
Lu was quoted by the Chinese-language Economic Daily News as saying that lowering the stock transaction tax rate would help boost the trading volume on the local bourse, but Tseng said that since the capital gains tax bill was passed last month, trading volume on the local stock market has been picking up.
The average daily trading volume was NT$65 billion in June. That figure rose to NT$67.5 billion last month and NT$78.9 billion this month, he said.
The ministry has estimated that the new tax will bring in the government between NT$6 billion and NT$11 billion a year.
With regards to a proposal by the National Futures Association to cut the futures transaction tax, Tseng said the rate had already been lowered from 0.01 percent in 2006 to 0.004 percent in 2008.
While the trading volume has been stimulated by shrinking the futures transaction tax rate over the years, a further cut would result in reduced tax revenues, he said.
The association would need to submit more information on the benefits before the ministry would consider such a move, he said.