Minister of Finance Chang Sheng-ford (張盛和) yesterday rejected the idea of cutting the futures transaction tax, saying historical data showed that such a cut would not spur trading momentum in the futures market.
A task force formed by the Financial Supervisory Commission (FSC) and the Ministry of Finance (MOF) to review financial services taxes held its first meeting yesterday afternoon, with financial institutions expressing the hope that the government would reduce their burden by cutting taxes.
The futures transaction tax — currently at 0.004 percent — was one of the taxes that local financial institutions proposed the government cut or even cancel to attract more foreign investors to Taiwan’s futures market.
“The ministry will not agree to cutting the futures transaction tax,” Chang said during a question-and-answer session at a meeting of the legislature’s Finance Committee yesterday morning, before the task force held its meeting.
Chang said the ministry had adjusted downward the futures transaction tax rate in the past, but there had been no corresponding rise in futures’ trading volume.
The rate was lowered from 0.01 percent in 2006 to 0.004 percent in 2008, ministry data showed.
Chang added that the weak momentum in the securities market this year might significantly drag down revenue from the securities transaction tax for the full year, which the government has set at NT$126.7 billion (US$4.3 billion).
Securities transaction tax revenue shrank 27.5 percent from a year earlier to NT$49.3 billion in the first eight months of the year, the lowest level since the same period in 2005, ministry data showed.
Based on current trends, revenue from securities transactions could be more than NT$40 billion short of this year’s target, Chang said.
The minister also denied that a proposal to impose a capital gains tax on securities transactions was behind the slow trading volume in the first half of the year, putting the blame on uncertainty because of the eurozone’s lingering debt crisis.
During the Finance Committee meeting earlier yesterday, Chinese Nationalist Party (KMT) Legislator Lu Shiow-yen (盧秀燕) also raised concern over the latest changes to the Department of Health’s proposed second-generation National Health Insurance (NHI) program, saying it might fail to generate enough revenue to support the lossmaking insurance program.
On Saturday, the department said it was raising the lowest threshold at which a 2 percent supplementary premium is to be levied on non-payroll income from NT$2,000 to NT$5,000.
Domestic banks may need to help collect a total of NT$2.79 billion in fees a year for the insurance program, Lu said, citing the department’s forecast.
However, the program may also have to spend NT$2.74 billion in costs annually on domestic banks’ collection transfer services, which would offset a large amount of the fees received, Lu added.