The Ministry of Finance and the Financial Supervisory Commission yesterday remained at loggerheads over measures to improve the business environment for the financial sector, with lawmakers warning that the government is drifting away from attempts to build a regional fund-raising hub.
The ministry frowned upon the commission’s proposals to cut the securities and futures transactions levy and raise tax deduction ceilings for insurance premiums, among other measures to invigorate the financial markets.
The divisions bode ill for the government’s bid to boost economic growth as the global slowdown dampens demand for exports, with the Cabinet pledging to come up with stimulus measures in three months.
Minister of Finance Chang Sheng-ford (張盛和) reiterated his opposition to ideas that would shrink the state coffers and weaken the nation’s financial health.
“While more [cross-ministerial] discussions will be held, the finance ministry will stand by the principle that stimulus measures must not affect overall tax revenues,” Chang told the legislature’s Finance Committee.
The reiteration raised concern the ministry and commission may not accomplish anything.
Chinese Nationalist Party (KMT) Legislator Lai Shyh-bao (賴士葆) said that the ministry’s uncompromising stance renders further discussions unnecessary and reflects a lack of unity among government agencies.
“It is strange that the finance ministry is at odds with the Financial Supervisory Commission, while state-owned Bank of Taiwan (台灣銀行) voices reservations about plans to tax interest and dividend income to shore up the national health insurance program,” Lai said.
“The government does not need opposition from outside, as the Cabinet appears to suffer from self-inflicted chaos and discord,” Lai said.
Commission Chairman Chen Yuh-chang 陳裕璋), who was pesent at the committee meeting, said favorable tax terms would boost business activity, increase job opportunities and generate more tax income.
The commission also plans to ease restrictions on the offshore brokerage operations of domestic securities houses and allow banks to recognize bad loan provisions as an expense that affects their income statements, but not their capital adequacy ratio.
KMT Legislator Lo Ming-tsai (羅明才) urged the commission and the ministry to adopt bold reforms, saying that recent policy changes are dragging Taiwan further away from the government’s goal of becoming a regional fund-raising center.
“I fail to appreciate the rationales behind recent policy moves,” Lo said.
“Rather than paving the way for a golden decade, the government is squeezing money from the public,” as seen in the oil and electricity price hikes and the imposition of a capital gains tax on profits from stock investments, Lo said.
The proposal to replenish health insurance funds by levying a 2 percent supplementary premium on stock dividends and interest income is weighing on the local bourse, making it more difficult to raise capital on the open market, Lo said.
Meanwhile, Mega Financial Holding Co (兆豐金控) chairman Mckinney Tsai (蔡友才) said the company has sought unsuccessfully to sell a 12.01 percent stake in Taiwan Business Bank (TBB, 台灣企銀) through the issuance of convertible bonds because the bank’s market value is lower than that of the bond.
The commission on Tuesday banned Mega Financial from making new investments for six months, a penalty that will remain until Mega Financial sells its stake in TBB.