Capital Gains Tax: A Fight to the Bitter End

Capital Gains Tax: A Fight to the Bitter End
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
July 24, 2012

Summary: The capital gains tax bill must make the final mile. The Presidential Office and the Executive Yuan must not relax. They must fight every step of the way. The political implications must be considered. Nothing must be accidental. They must communicate better with the public. They must seek consensus. In particular they must address the concerns of the business community over economic development. After all, the domestic economy is weakening. Growth prospects are deteriorating. Therefore after the government promotes the capital gains tax, it must concentrate on strengthening the economy. It must must come up with ways to grow the economy and inspire public confidence. The capital gains tax, which can start small and grow big, can do just that.

Full Text below:

Can the 24 year curse on the capital gains tax be lifted? We will know soon. The result of the prolonged tug of war will be announced tomorrow.

Tomorrow the Legislative Yuan will convene an extraordinary session. The Income Tax Amendment and the Basic Tax Rate Amendment represent the Capital Gains Tax. This Alternative Minimum Tax Amendment is first on the legislative agenda. It has been given priority over U.S. beef imports and NCC appointments. That means President Ma is determined to see it pass. On March 28, the Ministry of Finance Financial Efficiency Improvement Group listed the capital gains tax as the number one item on its tax reform agenda. Various parties have debated the issue for nearly four months. Hundreds of versions have been proposed. But one was selected. It is time for advocates of the capital gains tax to lay their cards on the table. Recently the economic situation has worsened. Voices of dissent can be heard from within the KMT. Can the bill go the distance? This remains to be seen.

The capital gains tax has long been a bone of contention. The initial dispute was over whether it should be imposed. Later the dispute was how it should be imposed. Eventually the dispute was over whether to postpone it or withdraw it from consideration. Three major sources of resistance now stand its way. Storm clouds have gathered. The first source of resistance is industry and business leaders who oppose a capital gains tax at this time. TSMC chairman Morris Chang is a prime example. He favors the levying of a capital gains tax. But he considers a tax increase during the current economic downturn "the worst possible timing." This argument assumes that the overall economic situation at home and abroad will get worse. Last week the Academia Sinica cut its economic growth estimate to 1.94%. This provided those opposed a capital gains tax on the grounds of bad timing additional ammunition. This strengthened the opposition.

The second source of resistance was idealists who wanted comprehensive tax reform. Most of these were academics. But some were politicians. Some of these people felt the newest version of the capital gains tax was too compromised by concessions to political and economic realities. They felt the tax base was too narrow, that it failed to tax people on the basis of their ability to pay, and that it strayed too far from their original goal of tax justice. The result was a capital gains tax that is neither fish nor fowl. Better not to promote it. Better to start anew. Some felt this way from the very beginning, and resistance has steadily increased. The ruling administration's version of the tax bill has been changed repeatedly. One concession has followed another. The Ma administration has lost credibility. Naturally this has invited heavy criticism.

The third source of resistance is less visible. It is unlike the first two sources of resistance, which are vocal. But often sneak attacks are harder to guard against. The capital gains tax bill does more than fulfill the government's goal of tax justice. It also symbolizes President Ma's leadership. If the capital gains tax dies a natural death, the Ma administration will become a lame duck -- ahead of schedule. The impact on government operations and economic growth will exceed even the impact on fairness and justice. That is why the capital gains tax must pass. The political significance of the capital gains tax bill is immense. That makes it instrumental in a political struggle against the Ma administration. Add to this arguments that the timing is not right and that the bill is flawed, and the capital gains tax bill may not survive.

When climbing a mountain, the fear is that one may just fail to reach the peak. Since it began promoting the capital gains tax, the Ma administration has lost a Minister of Finance and suffered market turbulence induced by policy uncertainty. Its credibility on policy has been repeatedly challenged. This has thrown the entire government off its stride. If it gives up after paying such a high price, the Ma administration will find it difficult to justify itself. Its leadership and prestige will suffer. The blowback should not be underestimated. By contrast, on the positive side, the capital gains tax bill in its current form may not be perfect. But it has already reduced the impact on the capital market. This is the closest it has come to passage since its introduction 24 years ago. Miss this opportunity and it is unlikely to return. Even if people are not fully taxed according to their ability to pay, at least the capital gains has been included in the tax base. Unearned income is no longer tax-free. We will have taken a step toward tax justice. Most importantly the success or failure of the capital gains tax bill affects the stability of the regime. President Ma Ying must use his leverage. He must ensure solidarity. He must rebuild his credibilty. He must move the country forward.

The capital gains tax bill must make the final mile. The Presidential Office and the Executive Yuan must not relax. They must fight every step of the way. The political implications must be considered. Nothing must be accidental. They must communicate better with the public. They must seek consensus. In particular they must address the concerns of the business community over economic development. After all, the domestic economy is weakening. Growth prospects are deteriorating. Therefore after the government promotes the capital gains tax, it must concentrate on strengthening the economy. It must must come up with ways to grow the economy and inspire public confidence. The capital gains tax, which can start small and grow big, can do just that.

證所稅拚最後一哩
【聯合報╱社論】
2012.07.24 01:52 am

纏繞政府稅制廿四年的證券交易所得稅開徵魔咒能否解除，即將揭曉；正反勢力拔河的最終戰，且看明朝！

立法院明天召開臨時會，代表開徵證所稅的所得稅法及所得基本稅額條例（即最低稅負制）修正案列為第一案，優先性更甚於美牛案及國家通傳會（ＮＣＣ）人事任命案，宣示馬總統非過不可的決心。從三月廿八日財政部財政健全小組將資本利得稅列為稅制改革第一案迄今，各方激辯近四個月，版本百出卻也終定於一尊，如今的證所稅案可說已進入圖窮匕現的掀牌階段，但近日經濟情勢急轉直下，加以國民黨內雜音不斷，究竟能不能衝過這最後一哩，顯然仍是疑慮重重。

目前證所稅案廣受議論的焦點，已從初期的「應不應該開徵」、中期的「如何開徵」，轉進到「緩議或撤案」，而且三大阻力加速匯聚，猶如山雨欲來風滿樓。第一大阻力就是反對此時開徵的工商業界人士，並以素負眾望的台積電董事長張忠謀最具代表性，他贊成開徵證所稅，但認為現在經濟不景氣，是增稅「最壞的時機」。這樣的論點其實打從一開始就存在，只是國內外總體經濟情勢日趨惡化，中央研究院又在上周大舉調降經濟成長率至百分之一點九四，更是給足「時機論」者需要的子彈，反對砲火也愈發猛烈。

第二個阻力是期望證所稅一步到位的稅改理想派，以財稅學者居多，但也不乏附此而議的政界人士，認為經過多方折衝後的證所稅最新開徵版本已過度向政治與經濟現實妥協，不只課稅範圍大幅縮減，也未展現量能課稅的精神，悖離租稅正義的政策初衷，故與其強行通過一個「四不像」的證所稅，不如不推或重議。這樣的主張也是自始即在，惟於今尤烈，因為執政黨的證所稅版本確是一修再修、一讓再讓，馬政府自失立場在先，自是授人以柄於後了。

第三個阻力若有似無，不像前二者那般旗幟鮮明，但「暗箭難防」的殺傷力恐怕更大。眾所周知，證所稅一案不只負有實踐政府租稅公平正義的政策使命，更承載了展現馬總統領導威信的政治任務，證所稅案如果無疾而終，馬政府也將提前跛腳，對政府運作及國家發展的衝擊更甚於公平正義的挫敗，所以證所稅案非過不可。然而，也正因為證所稅案的政治效應如此巨大，使它非常可能淪為反馬勢力的政爭工具，若再藉著時機不宜、方案不全等兩面大旗順桿而上，證所稅案的最後一哩勢難平靜。

為山九仞，最怕功虧一簣，證所稅案推動以來，馬政府已折損一位財政部長，也經歷政策不確定下的市場動盪，政策公信力更是一再遭到挑戰，拖累整個政府的施政節奏，如此高昂的代價下若就此罷手，馬政府不只難以自圓其說，領導威信更將掃地，其反作用力實不容小覷。相對的，從積極面去看，現今的證所稅開徵版本縱然不完美，但已降低對資本市場的衝擊，是廿四年來距離開徵最接近的時刻，錯過此次，再也難議；縱然未能完全量能課稅，但至少已將資本利得納入課稅基礎，讓不勞而獲的所得不再免稅，向租稅正義跨出了一步；最重要的是，證所稅的成敗，攸關政權的安定與否，馬總統應借力使力，由此凝聚團結、重建威信，推動國家大步向前。

證所稅要拚過最後一哩，此時此刻的府院絕對不能放鬆，更須步步為營，除了政治面須得縝密規劃安排、不容任何意外，亦須持續加強社會溝通，務求最大共識，尤其要關照工商企業界對當前經濟發展的憂慮，畢竟國內經濟表現確實愈來愈差，成長前景大不如前。因此，政府推動如同加稅的證所稅之後，當須心無旁鶩地全心全力拚經濟，拿出真正足以振興企業及民眾信心的發展經濟良策，則證所稅「開低走高」可期矣。