Hon Hai Group chairman Terry Gou (郭台銘), who has been an outspoken champion of many things, last week told President Ma Ying-jeou (馬英九) that the government’s plan to tax capital gains on securities investments was inappropriate and that there were more pressing issues for the government to deal with.
On Wednesday last week, Gou held a press conference to call on the government to impose higher taxes on him and 300 fellow wealthy Taiwanese, whom he said would be willing to pay more tax if the government could bring deliberations over the controversial capital gains tax plan to a close and pay more attention to economic development instead.
Gou, whose personal fortune was estimated at US$4.8 billion by Forbes this year — making him Taiwan’s fourth-richest tycoon — reckoned that his plan would contribute an additional NT$18 billion (US$600 million) in annual revenue to the national coffers — higher than any of the capital gains tax proposals presented by ruling and opposition lawmakers.
However, Gou’s proposal of imposing a higher tax on the wealthy sounds naive and impractical, both in terms of how to define wealth and whether the planned taxes would have an adequate legal basis. Therefore, Gou’s plans are unlikely to convince the government to scrap its planned capital gains tax.
However, there is no question that Gou dislikes the current tax discussion and resents certain government policies, including allowing hikes in electricity and fuel prices.
Gou is not alone in this regard. Several business leaders have recently criticized the government for failing to prioritize matters dealing with Taiwan’s national development problems. Farglory Group chairman Chao Teng-hsiung (趙藤雄) last week warned again that Ma’s “golden decade” national development plan would achieve nothing, or would fare even worse, if Taiwan is left to sail through turbulent global economic waters under the directionless Ma administration.
While the government and the legislature are unlikely to follow up on Gou’s wealth tax proposal any time soon, moves by the tycoon — in addition to other business leaders who recently objected about government policies — have political implications and help underline potential shifts in perceptions of class in Taiwan.
The government’s tax reforms have, thus far, appeared to target rich people in the name of social justice and fairness, but they may also have had the unwanted side-effect of increasing conflict between rich and poor.
Friction between wealthy and impoverished Taiwanese has been less of a problem than in many other countries, given Taiwan’s relative prosperity. There is also a widespread belief that if they work hard, people can one day become rich. Nonetheless, stagnating wages and the government’s poor management of the capital gains tax issue have helped highlight Taiwan’s growing income inequalities.
While the wealthy may be opposed to a capital gains tax, the measure seems to have found few advocates from less well-off sectors of society, making reform more difficult to achieve.
If businesspeople continue to pan the government over the tax issue, and if that prompts Ma and the Chinese Nationalist Party (KMT) government to again revise their tax proposal, then the government would have proven itself to be one that lacks determination and simply acts to win votes.