The Ministry of Finance (MOF) is under pressure to present a revised plan for the capital gains tax on securities within one month.
Despite previous claims that it was not the right time to alter the tax, Minister of Finance Chang Sheng-ford (張盛和) yesterday told a meeting of the legislature’s Finance Committee that the ministry would “do its best” to propose a revised version within a month.
“The securities capital gains tax can be reviewed earlier, as the finance ministry cannot ignore public opinion,” Chang said during a question-and-answer session.
As recently as late last month, he said the ministry would only consider reviewing the tax at the end of the year at the earliest. However, his remarks yesterday indicated a change of heart amid increasing criticism from the public, business representatives and lawmakers.
It also came after President Ma Ying-jeou (馬英九) changed his position this week by proposing an early review of the tax, rather than waiting until a year after its implementation.
The legislature passed a bill introducing the tax last year, which took effect this year, with most investors required to pay the tax after the TAIEX reaches 8,500 points.
Chang said the ministry would conduct an overall review of the tax, with the 8,500-point threshold to be one of the most important issues for further discussion. He added that there was a possibility it could be canceled after the review.
However, Chang said the ministry would maintain its bottom line for the tax. For instance, abolishing the securities capital gains tax and lowering the securities transaction tax will not be considered, he said.
The legislature has set up a task force, led by Chinese Nationalist Party (KMT) Legislator Alex Fai (費鴻泰), that is expected to begin reviewing the tax next week at the earliest. The ministry has also commissioned a team of experts to conduct research into the tax.
Separately, the Democratic Progressive Party (DPP) legislative caucus told a press conference yesterday that it supported the capital gains tax on securities transactions, but argued that the current regulations should be rewritten.
“The DPP supports tax reform that would address issues of social justice based on the principles of ability to pay and equality,” DPP Legislator Pan Men-an (潘孟安) said.
The current system, where an index of 8,500 points triggers the capital gains tax, has hurt the stock market since the amendment of the Income Tax Act (所得稅法) was passed last year, with market activity slowing over taxation fears.
As a result, DPP Legislator Chiu Yi-ying (邱議瑩) said the revenue from the securities transaction tax last year was NT$54.6 billion (US$1.86 billion) short of what had been expected.
DPP Legislator Wu Ping-jui (吳秉叡) urged the finance ministry to present its proposal soon if it intends to amend the tax code because legislation would take months to become effective.