Suspension of stock transaction tax urged by business chiefs

The China Post staff

Senior business executives again urged the government yesterday to temporarily suspend the stock transaction tax to help buoy the bearish local securities market amid the current economic hardship. The chief executive officers (CEOs) of major domestic business groups made the appeal during a breakfast meeting with high-ranking government officials in charge of economic and financial affairs. The closed-door meeting was organized by Jeffrey Koo, chairman of the Chinese National Association of Industry and Commerce. The participants included Vice Premier Lai Ing-jaw, Economics Minister Lin Hsin-i, Vice Finance Minister Sean Chen, and Chen Po-chih, chairman of the Council for Economic Planning and Development. Also present at the meeting were heads of leading domestic trade and industry associations and CEOs of blue-chip private enterprises, including Morris Chang, chairman of Taiwan Semiconductor Manufacturing Corp., and Far Eastern Group Chairman Douglas Hsu. Koo said after the meeting that senior business and industry executives have proposed a suspension of the securities transaction tax mainly because the previous Kuomintang government suspended levying the stock transaction tax six times in a bid to stimulate the domestic economy. “As the measure scored satisfactory results in the past, we hope the current Democratic Progressive Party can follow suit and suspend the stock transaction tax on a temporary basis,” Koo said, adding that the government could resume the levy once the local bourse regains momentum. Koo said all CEOs present at the meeting fully understand that the government’s financial situation is very tight at the moment. “But if the current economic slowdown continues, government tax revenues will only drop further. The most effective way to increase tax revenues lies in revitalizing the economy. As the securities market showcases a country’s economic strength, the government would be able to largely expand its revenues through an economic recovery fueled by a stock market boom,” Koo explained. In response to the proposal, both Vice Premier Lai and Vice Finance Minister Chen said relevant government agencies will make a further study of the issue. However, unidentified Finance Ministry officials were quoted as saying that they see no room for the government to suspend the stock transaction tax at least for the moment. Noting that government tax revenues account for only about 13 percent of Taiwan’s gross national product, the officials said local people’s tax burden is among the world’s lowest. Against this background, the officials said the government cannot afford to slash any tax, including the stock transaction tax. Nevertheless, government sources said Finance Minister Yen Ching-chang will discuss with the Economics Ministry and other relevant agencies the feasibility of suspending the stock tax after his return from his European trip today. At yesterday’s meeting, many CEOs also pushed the government to ease restrictions on mainland China-bound investment. “The proposal, however, didn’t receive any definite government response,” Koo said, adding that it remains unclear when the government will honor its promise to adjust the KMT government-initiated “go slow, be patient” mainland investment policy. The correlation between mounting domestic unemployment and hiring of foreign laborers was also a hot topic discussed at the meeting. Koo said CEOs in both high-tech and traditional industry sectors had complained about the government’s retrenchment of foreign labor quotas as a way to lower the domestic jobless rate. In his view, Koo said, the government has failed to look into the true factors that have led to the high unemployment rate among local workers. “In reality, the foreign labor retrenchment policy has helped drive up the jobless rate here as many traditional and high-tech companies have been forced to relocate abroad due to difficulties in recruiting enough laborers to work at night,” Koo explained. During the meeting, Koo said, many CEOs also urged the government to ease the current Labor Standards Law to offer greater freedom for labor-management negotiations on employment terms. Koo said the present labor laws impose too many restrictions on working hours, wages and other working conditions. “The stringent regulations have discouraged local employers from expanding their investments at home,” he asserted. According to Koo, Vice Premier Lai said at the meeting that he personally supports the proposal to revise the Labor Standards Law to give local employers a freer hand in negotiating working terms with prospective job seekers. “Lai has promised that relevant government agencies will study the feasibility of the proposed labor law revisions,” Koo said.