Proposals to cut or abolish the capital gains tax on stocks yesterday drew fire from the Green Party Taiwan and Social Democratic Party (SDP) alliance.
SDP Chairman Fan Yun (范雲) accused the nation’s two main parties — the Chinese Nationalist Party (KMT) and the Democratic Progressive Party (DPP) — of a “fetishism” for tax cuts, claiming that their competing proposals to revise the securities transaction tax would effectively eliminate the capital gains tax.
“While using people to earn money is taxed at a relatively high rate and many office workers have to pay a tax rate of more than 15 percent, using money to make money is not taxed at all,” Fan said, adding that personal income taxes account for about 75 percent of the nation’s tax revenue, compared with an average of 45 percent for Organisation for Economic Co-operation and Development (OECD) member countries.
She said that double-digit capital gain taxes in countries such as the UK, Japan, South Korea and Singapore belied claims that lower taxes were necessary to “save” Taiwan’s stock market.
“Taxes paid by the wealthy are actually less than those paid by workers,” Anti-Poverty Alliance convener Chien Hsi-chieh said, adding that the effective tax rate on the nation’s wealthiest 5 percent was less than 6 percent because of low taxes on capital gains.
At a time when Taiwan’s debt and unfunded pension obligations account for more than 160 percent of GDP, the government should not cut taxes further, he said.
Individual capital gains taxes on securities currently only apply to initial public offerings (IPO), as well as the sale of “emerging” and “off-market” stocks, he said.
A capital gains tax on big traders who sell more than NT$1 billion (US$30.6 million) in stocks a year was originally set to go into effect this year, but was deferred for three years by last-minute legislative action.
KMT presidential candidate Hung Hsiu-chu (洪秀柱) has proposed permanently eliminating the capital gains tax on “big traders” and IPOs. She has also called for cutting the securities transaction tax to 0.25 percent, while allowing traders to choose whether to pay an immediate additional 0.05 percent transaction tax or a 15 percent tax on any stock gains.
DPP Legislator Tsai Chi-chang (蔡其昌) has said that the party is proposing a “0.3 percent securities transaction tax and a 0.1 percent capital gains tax that would not be levied if the investor does not make any profit.”
The KMT has placed Hung’s proposal at the top of its agenda for the legislative session that opens today.
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