The Ministry of Finance on Friday confirmed the content of a draft special sales tax (popularly known as the luxury tax) bill, which would slap a levy on sales of certain expensive goods and services, as well as on short-term property ownership.
Among the most contentious issues being discussed is a clause that would impose a 15 percent tax on the sale of non-self-use houses, vacant plots of land and commercial buildings within one year of purchase, and a 10 percent tax on those re-sold within two years of purchase.
Although many still doubt such a luxury tax would do much to make the tax system fairer or help foster the healthy development of the local property market, if the levy takes effect in the second half of the year, as planned, it would represent the first tax increase the country has seen in years.
Now, with the ministry set to send the draft bill to the Cabinet for review this week and to the legislature for approval by the end of the month, national attention is shifting from the ministerial-level discussions to the various interactions of Cabinet, lawmakers and interest groups concerning the draft.
Given the intense opposition of the real-estate and luxury car industries to the luxury tax legislation, the government’s credibility is certain to be put to the test as the public wonders to what extent the final bill will be shaped by special interests.
To pre-empt opposition from lawmakers, the Ministry of Finance on Friday added several exclusionary clauses to the draft bill, ensuring it would target no one but short-term property speculators and the wealthy.
However, several questions remain about the ministry’s use of the luxury tax to address public discontent over high housing prices and the widening wealth gap.
For one thing, the government claimed that imposing the tax would help discourage speculative investment in the property market and prevent a real-estate bubble. However, the reason property prices are high in Taiwan, especially in Greater Taipei, is the nation’s relatively low land-value tax and real-estate tax, cheap borrowing costs and ample market liquidity. In other words, if the government really wants to do something about high prices, it needs to look at the bigger picture.
A second problem is the lingering suspicion that the government is trying to push through a populist policy to win votes, given that polls consistently show that the Ma administration’s tax policies are widely believed to favor the rich and businesses.
If the government really believed in making the tax system fairer, a better way would be to impose a capital gains tax instead of a special sales tax. The lack of quality jobs and stagnant wages also contribute to a situation in which the rich get richer and the poor get poorer.
The government needs to be aware that it faces a far bigger challenge, one that requires it to not only ensure a more equitable distribution of wealth, but also a more attractive environment for businesses and thereby encourage job creation and higher wages.
The luxury tax legislation is just the first step for the Ma administration on the road to fulfilling its many promises.
In their recent op-ed “Trump Should Rein In Taiwan” in Foreign Policy magazine, Christopher Chivvis and Stephen Wertheim argued that the US should pressure President William Lai (賴清德) to “tone it down” to de-escalate tensions in the Taiwan Strait — as if Taiwan’s words are more of a threat to peace than Beijing’s actions. It is an old argument dressed up in new concern: that Washington must rein in Taipei to avoid war. However, this narrative gets it backward. Taiwan is not the problem; China is. Calls for a so-called “grand bargain” with Beijing — where the US pressures Taiwan into concessions
The term “assassin’s mace” originates from Chinese folklore, describing a concealed weapon used by a weaker hero to defeat a stronger adversary with an unexpected strike. In more general military parlance, the concept refers to an asymmetric capability that targets a critical vulnerability of an adversary. China has found its modern equivalent of the assassin’s mace with its high-altitude electromagnetic pulse (HEMP) weapons, which are nuclear warheads detonated at a high altitude, emitting intense electromagnetic radiation capable of disabling and destroying electronics. An assassin’s mace weapon possesses two essential characteristics: strategic surprise and the ability to neutralize a core dependency.
Chinese President and Chinese Communist Party (CCP) Chairman Xi Jinping (習近平) said in a politburo speech late last month that his party must protect the “bottom line” to prevent systemic threats. The tone of his address was grave, revealing deep anxieties about China’s current state of affairs. Essentially, what he worries most about is systemic threats to China’s normal development as a country. The US-China trade war has turned white hot: China’s export orders have plummeted, Chinese firms and enterprises are shutting up shop, and local debt risks are mounting daily, causing China’s economy to flag externally and hemorrhage internally. China’s
During the “426 rally” organized by the Chinese Nationalist Party (KMT) and the Taiwan People’s Party under the slogan “fight green communism, resist dictatorship,” leaders from the two opposition parties framed it as a battle against an allegedly authoritarian administration led by President William Lai (賴清德). While criticism of the government can be a healthy expression of a vibrant, pluralistic society, and protests are quite common in Taiwan, the discourse of the 426 rally nonetheless betrayed troubling signs of collective amnesia. Specifically, the KMT, which imposed 38 years of martial law in Taiwan from 1949 to 1987, has never fully faced its
RSS