The Cabinet has no plans to adjust the securities transaction tax or intervene in the property market, despite weak trading volume on the stock market and soaring house prices, Premier Lin Chuan (林全) said on Wednesday in a radio interview.
“I do not want to deal with the issue [of the securities transaction tax] because any adjustment to the tax would create more uncertainty on the stock market,” Lin said in response to questions about the government’s plans to boost the trading volume on the stock market.
“Economic stability is what is needed right now. Daily trading volume was as high as between NT$200 billion and NT$300 billion [US$6.36 billion and US$9.53 billion] even when the securities transaction tax was at 0.3 percent, so the real task is to solve problems with the economy,” Lin said.
Photo: CNA
Daily trading volume has dropped to between NT$60 billion and NT$80 billion, and the Cabinet has been planning stimulus measures.
There are two contributory factors to the low turnover: a short-lived capital gains tax on securities implemented by the administration of former president Ma Ying-jeou (馬英九) and the global economic slowdown, Lin said, adding that the market has fared well compared with other Asian markets.
The performance of the stock market is a reflection of economic development and short-term stimulus measures would not revive the economy, he said.
The government has to rebuild a healthy economy and remove investment restrictions to bring daily trading volume back to a reasonable level, he said.
Neither would the government intervene in the property market, as maintaining market stability is the priority, Lin said.
From the government’s perspective, property prices would best remain unchanged, as another rise in prices would cause inflation and social problems, but a rapid decline would negatively affect the economy, he said.
Except for measures to reduce regional volatility, government intervention in the property market is not appropriate, he said.
However, policies that make housing more affordable, such as social housing programs and preferential loans, would be implemented, he said.
The previous administration strongly intervened in the property market and that resulted in today’s problems, he said.
“If you are dealt a bad hand, all you can do is prevent it from getting worse,” he said.
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