A proposal to introduce additional taxation on security transactions originally scheduled to begin next year was put off for three years after an amendment to the Income Tax Act (所得稅法) passed the legislature yesterday without any objections.
With the so-called “active trader clause” in the amendment, individual investors who sell more than NT$1 billion (US$31.5 million) of local shares a year would have to pay an extra 0.1 percent transaction tax on trades beyond the NT$1 billion threshold starting in 2018.
The existing clause was to have the regulation come into effect next year.
Photo: Chien Jung-fong, Taipei Times
The motion to institute a three-year moratorium on the clause was proposed by Chinese Nationalist Party (KMT) Legislator Lo Ming-tsai (羅明才), who cheered following the passage of the bill, saying: “The TAIEX will hit 10,000 points and Taiwanese will have better lives.”
The clause had met with opposition since it was proposed by the administration of President Ma Ying-jeou (馬英九) in 2012 as part of its efforts to address widening income distribution disparity.
Some lawmakers had called for the tax to be retracted or to raise the threshold from NT$1 billion to NT$5 billion.
While the change of threshold did not get a green light, the legislature, after consulting government agencies, voted to postpone the implementation of the tax.
The postponement was opposed by People First Party Legislator Thomas Lee (李桐豪) and Democratic Progressive Party (DPP) Legislator Lin Shu-fen (林淑芬).
They said that because there are doubts over the technicalities of the tax, the proposal should have been taken off the agenda to allow cross-party negotiation to fix the problem, rather than delaying the tax’s implementation.
Lin collected signatures for a cross-party negotiation, but failed to get at least nine other lawmakers to back her proposal.
After the DPP’s caucus meeting yesterday morning, Lin said that the party “resolved to put forward a tax-reform proposal next week” and that “the move had convinced other lawmakers who were going to sign the motion not to do so.”
“The road from exemption to reinitiation of the tax in the future is [as far as] that from the Earth to the moon,” she said on Facebook after the amendment was passed.
Lee slammed the moratorium as “irresponsible,” because it leaves the burden to the next legislature.
Calling the proposed tax “the biggest joke” of the eighth legislature and “a kit car” to which the KMT administration has been constantly making revisions, Lee said the amendment was a blow to social justice.
“Income comes with tax and loss with deduction,” Lee said. “What happens to fairness when those who try to start their own business by raising funding from the capital market — who are contributing to the nation’s development — are taxed, but not the big traders who frequently make big transactions on the stock market?”
Lee added that he was “disappointed with the DPP’s indifference to the bill.”
The Ma administration proposed the package in 2012 to introduce tax on income derived from securities transactions. In addition to the active trader clause, it also proposed that individual investors would be levied capital gains if the TAIEX hit 8,500 or higher, which was later approved by the legislature and was scheduled to take effect next year.
However, the legislature in June last year voted to drop the 8,500-point threshold.
Additional reporting by Shih Hsiu-chuan
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