The legislature’s Finance Committee yesterday approved by vote a proposal to revise the controversial capital gains tax on securities investment, with the third reading of the amendment to the Income Tax Act (所得稅法) expected to be approved next week at the earliest.
Chinese Nationalist Party (KMT) Legislator Alex Fai (費鴻泰), one of the committee conveners, said that if the KMT-proposed version does not encounter opposition during negotiations among the different legislative caucuses, it could pass the third reading on May 31 at the earliest.
However, if the legislative caucuses failed to reach a consensus, review of the bill may be postponed for a month, he added.
Fai yesterday took the unusual move of calling for a vote on the proposed amendments, which he said could help accelerate the process of reviewing the bill.
Democratic Progressive Party (DPP) Legislator Hsu Tain-tsair (許添財) raised an objection to the bill after the vote, saying that the amendments required more discussion by the caucuses.
During the legislative question-and-answer session, DPP and People First Party lawmakers pressed Minister of Finance Chang Sheng-ford (張盛和) for an apology, calling his move to impose the capital gains tax last year a “bad decision.”
Chang refused to apologize.
When asked by reporters about his opinion on the vote to amend the tax, Chang said: “I am happy about the outcome [of the vote], only if the outcome would benefit the nation and the economy.”
The legislature launched a task force earlier this month to review the capital gains tax, with a view to dropping the 8,500-point threshold that would automatically trigger the tax for most individaul investors.
The task force met on Wednesday last week and reached a consensus with the Ministry of Finance and the Financial Supervisory Commission on a proposed revision of the tax.
Other than canceling the 8,500-point threshold, individual investors who sell NT$1 billion (US$33.3 million) in shares within the calendar year will be subject to either a 15 percent tax on their capital gains, or a 0.1 percent tax rate on their stock trades that exceed NT$1 billion, effective 2015.
In related news, UBS Securities yesterday raised its TAIEX target to 8,650 from previous 8,350, if the proposed revision goes through.
“With the capital gains tax overhang removed, we expect the market to remain resilient in the near term,” William Dong (董成康), equities and research head of UBS Securities Taipei branch, said in a note.
“We believe the TAIEX could reach our target in June on ample liquidity, the start of the tech seasonal build, and the upcoming Computex,” referring to the annual computer and electronics show next month, Dong said.
However, this could be followed by a period of consolidation for the stock market, as investors reassess the sell-through rate of new technology products and review potential earnings risks, he said.
Additional reporting by Kevin Chen