A finance ministry official yesterday voiced opposition to a proposal by business leaders to suspend the securities transaction tax, the Chinese-language media reported yesterday.
"Currently the government is already short on tax revenue, therefore the administration is unable to suspend the tax," an unidentified finance ministry official was quoted as saying. "Furthermore, suspension of the [securities transaction] tax is likely to stimulate the stock market for a day or two. The [recent] decline in the stock market is because of the negative economic climate, it has no relationship with the securities transaction tax," the official added.
Local business representatives proposed Monday that the administration suspend the securities transaction tax temporarily, while meeting with Vice Premier Lai In-jaw (
Lai said the proposal would be reviewed in general terms, adding that he has instructed officials of related ministries to study the proposal. Any proposal that would help revive the stock market and stimulate the economy would be seriously reviewed by the administration, he stressed.
But according to a ministry official, the move would do little to stimulate the bourse.
"To verify whether suspending the securities transaction tax would help the stock market, we have to look back on previous experience during the KMT-ruled period. Empirically, the suspension only generated one or two day's stimulus for local stock market," the official said in the report.
Originally the tax rate for the securities transaction tax was 0.6 percent, it was cut in half, or 0.3 percent, in early 1990s.