TAIPEI, Taiwan — The business community has suggested eliminating or slashing stock transaction taxes to boost Taiwan’s weakening stock market, but Ministry of Finance (MOF) officials said yesterday they have not received any instructions from the Executive Yuan on the issue.
Local media reported that Premier Liu Chao-shiuan and Vice Premier Chiu Cheng-hsiung had met Friday to discuss feasible countermeasures to fight Taiwan’s ongoing economic sluggishness that has led to a steep decline in local share prices.
Chiu said the Executive Yuan would come up with a stimulus package in the coming week that would address general economic woes, including provisions to bolster the local bourse.
Chang Pen-tsao, chairman of the General Chamber of Commerce of the Republic of China, arguing that a quick fix was needed to help the slumping stock market, urged the government earlier this week to stop collecting stock transaction taxes on a temporary basis to give local markets momentum.
The public’s investment confidence has been seriously dampened, and a middle- or long-term policy will not be swift enough to serve that end, he argued.
“The government should study the possibility of temporarily stopping collecting stock transaction taxes for three to six months,” he suggested.
Ministry of Finance officials on Saturday countered, however, that such a measure could not be immediately implemented because it would require passage of an amendment in the Legislative Yuan.
Chang also urged the government to follow Hong Kong and Singapore in granting tax rebates to the public, particularly low and middle income families.
According to Chang, business groups will suggest more proposals to help the government improve business conditions.
The Taiwan Stock Exchange’s weighted index closed at 6,307.28 on Friday, down nearly 3,000 points from the index’s 9,295.20 close May 19, the day before President Ma Ying-jeou was inaugurated.
In the first week of September alone, the weighted index plunged by about 10.5 percent, or 739 points — the sixth largest single-week drop since 1990. The decline was the equivalent of an NT$1.88 trillion (NT$59.5 billion) loss in market value.
Analysts said conditions for a rebound were not visible in the short term, but they contended that stock prices have become much more attractive at their current low levels.
As a result of increased concerns over the deteriorating investment climate across the globe, Taiwan’s stock market is expected to remain sluggish in the fourth quarter before hitting bottom, the analysts believed.
They warned the market could fall further next week because of continuing selling pressure and urged investors to carefully assess investment risks.
President Ma and government officials, including Premier Liu and Vice Premier Chiu, have repeatedly pledged their resolve to reinvigorate Taiwan’s economy and promised a positive turnaround once the government’s policies have time to take effect.
In a Saturday meeting in Changhua in central Taiwan with local government chiefs of the ruling Kuomintang, Liu promised economic improvement “by the end of this year.”