Controversial amendments to impose a capital gains tax on securities transactions passed their first reading in the legislature yesterday amid news that Minister of Finance Christina Liu (劉憶如) will stay in her post after a meeting with President Ma Ying-jeou (馬英九) on Thursday night.
With no objections raised by lawmakers at the plenary session, the Executive Yuan’s amendments to the Income Tax Act (所得稅法) and the Income Basic Tax Act (所得基本稅額條例) were referred to the legislature’s Finance Committee for review.
The legislature also passed the first reading of alternative amendments initiated by lawmakers from the Chinese Nationalist Party (KMT) and the People First Party. The Democratic Progressive Party is still working on its own proposal.
There are wide variations between the proposals, ranging from tax rates and tax-free thresholds for individual investors, domestic enterprises and institutional investors, to whether to reduce the 0.3 percent securities transaction tax or to increase the securities transaction tax in lieu of imposing a tax on securities, to requirements for tax credits for long-term investors.
The KMT caucus proposed delaying review of the amendments at the Procedure Committee meeting on Tuesday, leading to allegations that the Ma administration was not serious about tax reform and that people with a vested interest were lobbying lawmakers to not pass the tax.
On Wednesday, Ma reiterated the administration’s determination to implement the tax and said the party had talked its lawmakers out of a boycott.
As for Liu, speculation was rife on Thursday after she missed the weekly Cabinet meeting where the Cabinet resigned en masse ahead of the May 20 presidential inauguration and remained incommunicado throughout the day. There were reports that Liu had told Premier Sean Chen (陳冲) and Ma that she wanted to quit.
At 10:37pm on Thursday, the Presidential Office issued a statement saying Ma had met with Liu for 30 minutes, and that she would continue as finance minister to ensure the passage of the securities tax proposal.
Presidential Office spokesman Fan Chiang Tai-chi (范姜泰基) said Ma had praised Liu’s efforts in pushing the capital gains tax draft and said he expected her to continue the hard work. Liu thanked Ma for his support and promised to work harder, Fan Chiang said.
Meanwhile, Sean Chen denied Liu had offered to resign, saying he spoke to her on the telephone on Thursday afternoon and she had not said anything about leaving the Cabinet. The Executive Yuan said Liu had taken Thursday off.
Some KMT lawmakers were yesterday critical of Liu’s demeanor.
Calling her haughty, KMT Legislator Lu Chia-chen (盧嘉辰) said it was like “Liu is the only one who knows what a good policy is, and we don’t.”
“It is not the first time she has thrown her weight around,” KMT Legislator Lo Shu-lei (羅淑蕾) said.
KMT Legislator Hsu Yao-chang (徐耀昌) said Liu had a high level of professionalism, but was not good at communicating with lawmakers.
Meanwhile, KMT Legislator Ting Shou-chung (丁守中) yesterday confirmed media reports that Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) handed him a proposal for revising the Executive Yuan’s securities tax proposal.
For domestic enterprises and institutional investors, the Cabinet has suggested retaining the current alternative minimum tax system, under which firms are taxed on certain forms of tax-exempt income and gains arising from investments in securities and futures transactions, with the tax-free threshold on the income lowered from its current level of NT$2 million (US$68,020) to NT$500,000 and the tax rate raised from 10 percent to 12 percent.