Financial Supervisory Commission (FSC) Chairman Wellington Koo (顧立雄) yesterday voiced support for the extending the day-trading tax cut, saying that the measure has helped boost turnover on the local stock market.
The day-trading tax was halved on April 28 from 0.003 percent to 0.0015 percent.
The move resulted in steady turnover growth, but many investors remain hesitant to take advantage of it because of the one-year duration of the tax cut, Koo said on the sidelines of a ceremony listing CPC Corp, Taiwan’s (CPC, 台灣中油) green bonds on the Taipei Exchange.
Photo: CNA
While foreign institutional investors are still assessing the potential of reduced trading costs, extending the tax cut would help attract additional trading by easing investors’ uncertainties, Koo said.
Koo said that he would work with the Ministry of Finance on extending the tax cut.
“The ministry’s response thus far has been favorable,” he said.
However, the ministry has voiced concerns about whether the improvement in trading turnover justifies the estimated NT$3.75 billion (US$124.5 miilion) loss for the government from reduced tax revenue from day trading.
Total tax revenue from stock trading in the first eight months of this year reached NT$54.5 billion, but the ministry set a target of NT$97.7 billion for this year.
Local shares moved lower yesterday to close below the TAIEX’s monthly moving average of 10,561 points as investors turned cautious, waiting to see what the US Federal Reserve will decide to do on interest rates.
The US central bank was expected to announce whether it will raise interest rates at the end of a two-day policymaking meeting in Washington yesterday.
The TAIEX closed down 56.97 points, or 0.54 percent, at 10,519.17, on turnover of NT$126.854 billion, Taiwan Stock Exchange (TWSE) data showed.
The proportion of day trading in relation to total turnover has risen steadily from about 17 percent of total buy and sell orders on April 28 to more than 24 percent as of the end of Tuesday as the TAIEX continues holding above the 10,000-point mark, TWSE data showed.
The average daily turnover on the exchange had grown to NT$131.8 billion at the beginning of this month, gaining 30 percent compared with a year ago, the commission’s tallies showed.
In related news, CPC yesterday issued NT$2.8 billion in 10-year “green” bonds with a coupon rate of 1.16 percent.
The proceeds are be allocated toward expanding the state-run company’s natural gas infrastructure in a bid to reduce its emissions.
The bonds are in demand among domestic and foreign banks, as well as local companies, Taipei Exchange said.
Additional reporting by CNA
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