Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday urged lawmakers to renew a day-trading tax cut by today at the latest, or risk complicating revenue collection and hurting market sentiment.
The transaction tax was halved from 0.3 percent to 0.15 percent in 2017 and has been credited with helping boost turnover in Taiwan’s US$2.5 trillion stock market, the world’s 10th-biggest by value.
The reduction, which has been extended several times, would expire by the end of this year if lawmakers fail to vote on another reinstatement.
Photo: CNA
“It’s creating uncertainty now, and we hope lawmakers can pass an extension of the day-trading tax cut,” Chuang told legislators, adding that regulators including the Financial Supervisory Commission have made preparations in case the tax cut is not renewed.
“It’s important for stock investors to feel secure,” she said.
The failure to pass a measure that enjoys widespread support underscores how wrangling in the legislature, where two allied opposition parties together hold a narrow majority over the Democratic Progressive Party, is affecting broader legislation. The past month has seen sometimes violent clashes between lawmakers amid disputes over everything from the budget to the appointment of new judges.
Taiwanese stocks’ trading volume might shrink 30 percent if the tax reduction is not extended by another three years, the Chinese-language Economic Daily News reported, citing Financial Supervisory Commission Deputy Chairman Chen Yen-liang (陳彥良).
Last week, day trading accounted for roughly one-fifth of trading volume and about 40 percent of value, Taiwan Stock Exchange data showed.
While the tax cut is on lawmakers’ agenda today, there is no guarantee that they would vote on it.
Chuang made it clear that the government hopes the tax cut would eventually be renewed.
It could be enacted retrospectively, but that would be problematic, she said.
“It’ll be complicated if the extension doesn’t pass by the deadline of end 2024, as the government would need to collect the 0.3 percent tax rate first and then refund later if it’s later cut,” Chuang said.
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