The Taiwan Solidarity Union (TSU) yesterday announced its conditional support for the government’s proposed revisions to the capital gains tax on securities transactions, a surprise move which left the Democratic Progressive Party (DPP) in an awkward position today, the final day of the current legislative session.
The DPP caucus is set to announce its final position on the controversial proposal after a caucus meeting this morning.
If it decides against boycotting the government’s proposal, discussion of the amended tax would likely clear the legislature after a party negotiation, and an extra legislative review session next month would not be required.
TSU Chairman Huang Kun-huei (黃昆輝) told a news conference yesterday that the party remained opposed to the capital gains tax on securities transactions, but has decided to support the passage of the revisions as soon as possible to boost Taiwan’s faltering economy and confidence-shaken stock market.
“This is an expedient strategy because we believe that prolonging the legislative process would likely jeopardize the stock market, in particular affecting individual investors,” Huang said, adding that the party still proposes to seek the abolition of the “outdated” tax in the future.
Under the revised bill, the 8,500-point threshold that automatically triggers the imposition of the tax on most individual investors would be scrapped, while individual investors who sell NT$1 billion (US$33.49 million) worth of shares within a calendar year would be subject to either a 15 percent tax on their capital gains, or a 0.1 percent tax rate on any stock trades that exceed NT$1 billion.
The changes would take effect from 2015.
Huang said that there had been pressure from individual investors who demanded that the TSU help resolve the issue as soon as possible, adding that a boycott of the proposal could not succeed in the face of the Chinese Nationalist Party’s (KMT) majority and would merely defer the new tax regulation for another two months.
However, the TSU did not offer its support unconditionally, Huang said, as the party is set to propose that initial public offering stocks (IPO) should not be taxed.
DPP Legislator Pan Men-an (潘孟安) said yesterday that the party is unlikely to abandon its opposition to the government’s proposal, but added that the DPP’s final position would not be clear before the caucus meeting was completed this morning.
It is unfair that the DPP has to “clear up the KMT’s mess,” Pan added, because the current legislation — including the 8,500-point threshold — were the KMT’s ideas.
The People First Party (PFP) has submitted its own proposed revision to the tax and demanded it to be put to a vote along with the government’s proposal.
If the KMT’s proposal fails to pass the third reading in the plenary today, it would not be discussed again until the provisional session, which is proposed to be held between June 13 and 27.
Minister of Finance Chang Sheng-ford (張盛和) has been lobbying lawmakers to support the proposal and insisted that the exclusion of IPO stocks from the tax base would not be acceptable.
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