Last-ditch talks ahead of extra session

UNRESOLVED ISSUES::Legislators remain bitterly divided over a number of issues, including imports of pork with ractopamine and the imposition of a capital gains tax

By Shih Hsiu-chuan and Chris Wang  /  Staff reporters

Tue, Jul 24, 2012 - Page 1

Government officials yesterday made last-ditch efforts to call for resolutions to various long-running issues in the extra legislative session amid ongoing opposition from civic groups, opposition parties and some Chinese Nationalist Party (KMT) lawmakers.

An informal meeting is to be held this morning for lawmakers to formally launch a four-day extra session to decide whether to ease the ban on imports of beef containing traces of the livestock feed additive ractopamine and to levy a capital gains tax on securities transactions. A confirmation vote on four National Communications Commission nominees is also expected to be placed on the agenda, along with other matters.

The extra session begins tomorrow.

The aforementioned issues were left unresolved during the four-month-long regular session that ended on June 15, which saw only 11 bills passed due to political confrontation over those issues and others, including the recent fuel and electricity price hikes.

On the beef issue, Executive Yuan spokesperson Hu Yu-wei (胡幼偉) and Department of Health Minister Chiu Wen-ta (邱文達) highlighted “the potential danger of Taiwan being sued in the WTO” if it makes the ban on imports of pork containing traces of ractopamine part of the Act Governing Food Sanitation (食品衛生管理法).

Following the adoption of maximum residue levels for ractopamine in beef and pork by international food safety body the Codex Alimentarius Commission earlier this month, some opposition lawmakers have softened their positions on beef imports, but they remained adamant on the inclusion of a statutory rule that the food standard does not apply to imported pork.

Chiu and Council of Agriculture Minister Chen Bao-ji (陳保基) vowed to follow through the government’s promise that it would keep beef and pork standards separate.

On plans to impose taxes on income earned from securities transactions, Minister of Finance Chang Sheng-ford (張盛和) and KMT Policy Committee chief Lin Hung-chih (林鴻池) took on Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) chairman Morris Chang (張忠謀), one of many business community leaders opposing the tax proposal.

“Until now, business leaders have not relented in their efforts at lobbying against the tax plan,” Hu said, but “we still hope that the legislature passes the plan in the extra session.”

In response to business leaders and opposition parties of the opinion that it “was not a good time” to introduce the tax in the midst of continuing economic gloom, Chang Sheng-ford said that postponing a decision on the issue would only perpetuate disturbances in the stock market.

“After we have gone through months of negotiation, the extent to which the stock market will be affected by the final version of the tax plan is of little concern. We are this close to setting up the tax system this time. If we failed this time, it would make it even more unlikely that a capital gains tax could be imposed on securities investments in the future,” Chang Sheng-ford said.

Lin said he failed to understand why Morris Chang opposed the tax when he has long suggested that the government increase the tax burden on the rich while decreasing it for the poor, to address the uneven distribution of wealth.

Opposition parties called for the review of the capital gains tax plan to be shelved for the time being.

Party whips from the DPP, the People First Party (PFP) and the Taiwan Solidarity Union (TSU) told a press conference that while they supported such a tax, the time was not right and the content of the bill would hurt economic development.

“We call for the KMT to withdraw the proposal for three reasons — the legislation process has been chaotic, the content of the proposed bill fails to address fairness and the time is not right to introduce the tax, when the local economy is slow,” DPP whip Ker Chien-ming (柯建銘) said.

Under the “dual-track, two-stage” proposal supported by the KMT, next year and in 2014, investors would pay a capital gains tax of between 0.02 and 0.06 percent on stock trades only when the TAIEX hits 8,500 points or higher.

Investors who sell more than 10,000 shares from initial public offerings or more than 100,000 shares in emerging stocks or unlisted companies would have to pay a 15 percent tax on capital gains, but they would get a 50 percent tax discount if they held on to their shares for more than a year.

Starting in 2015, all investors would have to pay a 15 percent tax on their capital gains, while investors who sold shares worth NT$1 billion (US$33.3 million) in one year would face a 15 percent tax.

The legislation process has been “nightmarish,” Ker said, as the original proposal, made by the Executive Yuan and endorsed by the president, was rejected by the KMT caucus, which submitted different versions of the bill.

The proposal has neither addressed the principle of the ability to pay nor the principle of equity, he said, adding that it would bring great harm to capital markets in Taiwan with the inclusion of IPOs, unlisted companies and emerging stocks.

The president’s insistence on passing the legislation is suspicious, Ker said, adding that the eighth round of cross-strait negotiations would be held next month and that President Ma Ying-jeou’s (馬英九) administration may be trying to bring in more Chinese investment.

PFP caucus whip Thomas Lee (李桐豪) accused the KMT caucus of doing nothing to coordinate party negotiations on the five proposals on the table, saying that the party could try to pass the bill by a vote with its majority advantage.

About 30 percent of the between NT$6 billion and NT$6.6 billion that the new tax is expected to bring in would come from unlisted companies, Lee said.

"That would basically discourage emerging local companies with aspirations to list on the TAIEX,” Lee said.