Fri, Dec 05, 2014 - Page 13 News List

Review of stock trader tax put on hold

MARKET DRAG:Some said the proposed tax is depressing the local bourse, but others blamed externalities such as concern about the US quantative easing program ending

By Crystal Hsu  /  Staff reporter

The Legislative Yuan’s Finance Committee yesterday tabled the review of a bill proposing to raise the taxable threshold for active stock traders until after a Cabinet reshuffle has been concluded, in a show of respect for policymakers.

The Ministry of Finance, which had earlier voiced reservations about the proposal, appeared to soften its stance and said it would now respect the decision of lawmakers on the matter.

At issue is a bill sponsored by Chinese Nationalist Party (KMT) Legislator Lo Ming-tsai (羅明才) and his legislative colleagues that suggests raising the taxable threshold on active stock traders from NT$1 billion (US$32.09 million) to NT$5 billion.

The clause is part of the capital gains tax on stock investments that is due to take effect next month and is widely blamed for the sluggish trading seen since September, as active traders flee the market.

“The clause, as it is, would generate a very limited amount of tax revenue per year, but it has already had a huge impact in terms of lost taxes on stock transactions,” Lo said.

Lo said he might seek to remove the clause altogether when the committee takes up the issue again on Monday.

Minister of Finance Chang Sheng-ford (張盛和) has refused to act on major policy or personnel issues after resigning along with the rest of the Cabinet on Monday.

Earlier, Chang said the light turnover of the local bourse has more to do with uncertainty over the ending of the US quantitative easing plan and other external factors.

It would be a better idea to re-evaluate the capital gains tax after it has been in practice for a period of time, Chang has said.

However, ministry officials have acknowledged that the market has been volatile in the past year, especially with another new policy on day trading, which has made it easier for major market players to be taxed.

The Financial Supervisory Commission introduced the new measures on day trading in two phases this year, aimed at invigorating the local bourse, but the most recent amendment to the capital gains tax was in June last year, Vice Minister of Finance Sheu Yu-jer (許虞哲) said yesterday.

Sheu admitted that the ministry failed to factor in the impact on day trading when it previously pushed for the new taxation on capital gains.

In current taxation legislation, individual investors who sell NT$1 billion in shares a year are 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 next year.

The government already levies a transaction tax of 0.3 percent on all stock market trades, but does not impose capital gains tax on stock transactions.

Buoyed by hopes of the removal of the capital gains tax, the financial subindex on the Taiwan Stock Exchange climbed 1.81 percent yesterday, leading the TAIEX to rise 0.54 percent to 9,225.11 points on turnover of NT$103.46 billion.

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