TAIPEI: Kuomintang lawmaker Lo Ming-tsai submitted a proposal that would eliminate a tax on stock gains targeting major players in the stock market before it even takes effect next year.
Lo’s proposal to revise the Income Tax Act delivered on his previous promise to push for the scrapping of the tax completely instead of simply raising the threshold at which it kicks in.
It came as the Legislature’s Finance Committee began to review another proposed revision that would have the tax apply to traders who buy and sell NT$5 billion (US$160 million) in shares in a single year instead of the NT$1 billion previously stipulated.
Taiwan already imposes a transaction tax of 0.3 percent on all stock market trades but does not rigorously tax gains on stock sales.
The new tax has sparked resistance among investors in Taiwan’s market, with many big players opting to park their funds elsewhere to avoid the tax.
Some have blamed the tax for a fall in daily turnover to between NT$70 billion and NT$80 billion in September, October and November from an average of more than NT$90 billion per day between March and August.
Under the existing capital gains tax, which was passed in mid-2013 and is scheduled to go into effect next year, major market players would have the choice of paying either an extra 0.1 percent transaction tax on trades beyond the NT$1 billion threshold or a 15 percent tax on their capital gains.
The fall in turnover has led many brokerage firms to raise the alarm over their bottom lines because of the loss in fee revenue, and Lo contended that if the trend were to continue, it could cost 50,000-60,000 people employed by brokerages their jobs.
The government has collected more than NT$100 billion in stock transaction taxes a year in the past, but the lower turnover caused by the looming tax could cut revenue from the transaction by as much as NT$30 billion a year, far more than the new tax would raise, he contended.
