Minister of Finance Chang Sheng-ford (張盛和) yesterday said he would respect a legislative decision to amend the stock transaction and capital gains taxes, as the rapid global slowdown warrants economically friendly policies.
The legislature today is expected to approve proposals to cut the stock transaction tax from 0.3 percent to 0.25 percent and set the capital gains tax at 0.05 percent.
The planned change, the fourth of its kind in three years, would leave tax burdens intact for most investors, but would spare active traders a 0.1 percent levy on share transactions totaling NT$1 billion (US$30.62 million) within a year.
Photo: Lo Pei-der, Taipei Times
“The proposed revision has turned from taxation into a political issue,” Chang told reporters.
Chinese Nationalist Party (KMT) presidential candidate Hung Hsiu-chu (洪秀柱) proposed the revision to woo stock investors, Chang said.
The move might also help to settle the longstanding controversy over changes to the taxes and end the policy uncertainty once and for all, Chang added.
The unexpected and rapid economic slowdown lent support to policies favorable to GDP growth, he said, adding that the taxation change could be considered a stimulus measure.
The nation’s export-oriented economy grew 3.84 percent in the first quarter, but slowed to 0.52 percent in the second quarter and is struggling to stay above zero this quarter due to faltering external demand.
The decline in exports showed signs of easing this month after reaching double-digit percentages the past three months, Chang said, adding that the landscape might improve next quarter due to Christmas sales.
To prop up the economy, the ministry is considering commodity tax cuts on new-car purchases and encouraging exports of used cars, Chang said.
While exports of used cars might not lift GDP growth much, it would help boost domestic demand and ease air pollution, as old cars tend to be less environmentally friendly, he said.
The ministry plans to cut the commodity tax for new car purchases by NT$30,000 to NT$50,000, but it is up to the Cabinet to finalize the details, the minister said.
Used cars are badly needed in emerging countries and generate significant revenue for exporters in South Korea and Japan, Chang said.
Used cars carry heavy weight in the local market as well, with two-year-old cars accounting for 50 percent of overall automobiles, the minister said.
The commodity tax cut would provide rental agencies incentives to buy new cars, he said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading