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Equity losses due to economic fundamentals not tax: Chang

Equity losses due to economic fundamentals not tax: Chang

Taipei, July 24 (CNA) Finance Minister Chang Sheng-ford (???) reiterated Friday that recent heavy losses in the local equity market resulted from the weak economic fundamentals at home and abroad, adding that investors cannot blame the tax issue for the downturn. Chang made the comments after the Financial Supervisory Commission (FSC) released the results of a survey Thursday which, in the view of the FSC chief, showed that a tax burden related to securities transactions has turned away many major market players and falling interest in trading has dragged down local share prices. Since April 27, when the weighted index on the local main board closed at 9,973.12 points, the highest for this year, the market had fallen more than 1,000 points, or more than 10 percent, as of Thursday. Chang said that the recent downturn largely reflects a fall in exports Taiwan has suffered amid weakening global demand. He emphasized that Taiwan is not the only country to encounter unfavorable conditions in the global market, and many of its rivals, such as South Korea, are also reporting falling exports. In June, Taiwan's exports fell 13.9 percent from a year earlier to US$23.07 billion, marking the fifth consecutive month in which the country registered a year-on-year drop in exports. In the first six months of this year, Taiwan's exports fell about US$11.1 billion from a year earlier. Chang said that the dramatic fall in exports in the six months largely resulted from a plunge in international crude oil prices which sent Taiwan's petrochemical product prices lower. Chang said that it was inappropriate for investors to attribute the losses in the local equity market to the tax scheme. The FSC survey showed that the current shrinking turnover was caused by a fleet of major market players who wanted to avoid a tax burden. In fact, Chang said, the implementation of a tax on stock gains, which was passed by the Legislative Yuan in mid-2013, has been postponed until 2018, and the tax has not affected any investors yet. Under the tax scheme, major market players would have had the choice of paying either an extra 0.1 percent transaction tax on trades beyond the NT$1 billion (US$32.05 million) threshold or a 15 percent tax on their capital gains. Taiwan already imposes a transaction tax of 0.3 percent on all stock market trades but does not rigorously tax gains on stock sales. Due to the heavy losses in the local bourse, some lawmakers and many securities brokerages have urged the government to abolish the tax on stock gains. Many investors have also complained that they have to pay more taxes on their cash dividend income, while they have been also required to pay extra national insurance fees if they make a certain amount of gains from securities trading. In response to Chang, FSC Chairman Tseng Ming-chung (???) said that FSC, the top financial regulator in Taiwan, has never claimed that there was a need to abolish the tax on stock gains, but the commission hopes that Taiwan will improve its tax system and build a fair taxation environment. (By Wei Shu, Tien Yu-pin and Frances Huang)


Updated : 2021-09-23 08:51 GMT+08:00