Liu said her financial reforms will seek to maintain a balance between government income and spending, but her pursuit of taxation fairness will avoid creating a ?class consciousness? differentiating the rich from the poor.
Liu confirmed that in her phone conversation with President Ma Ying-jeou on Thursday the head of state did talk about the possibility of imposing a so-called ?rich people?s tax? in response to her idea of doing ?justice? to the middle class.
Liu, who is set to be sworn in as finance minister Monday, said a ?rich people?s tax,? which does not exist in the taxation law, is a term loaded with class implications.
But in the West there is the ?windfall tax? in support of taxation fairness, taxing wealth ?sent from heaven,? she said. It remains to be seen how such a tax could be imposed, she said, adding the finance ministry will listen to different voices and seek a consensus on the matter.
But she repeated that her tax reform agenda will not seek to raise the stock transaction tax or introduce a stock gains tax.
The stock transaction tax is not the ?most perfect? form of tax, as taxes are generally more acceptable when associated with gains, she said. But some financial theories support the adoption of second-best taxation forms, she maintained.
Stock transaction taxes, which have been in place for 20 years in Taiwan, have contributed an average income of NT$100 billion to the national coffers annually, and it will be less controversial to let the current practice stay put, she said.
Many other countries impose taxes on either stock transactions or gains, and against such backgrounds the introduction of a stock gains tax is out of the question, Liu said.
Liu, who is leaving her leadership post at the Council of Economic Planning and Development for the finance ministry, has a mission to realize President Ma?s promise of taxation fairness without damaging the markets.
One of her tasks is to continue the real estate taxation reform introduced by outgoing Finance Minister, Lee Shu-der.
Liu said real estate is now officially valued by its actual market value. In the past government-assessed prices ? which were much lower than the actual value ? formed the basis for taxation on transactions.
But Liu stressed that the practice of registering actual market value is only the first step.
There is still a long road ahead before the government can implement taxation on real estate transactions based on the registered value, as many technical problems need to be solved, she added.
Liu described her new role as the nation?s equivalent of a company?s chief financial officer (CFO) who has to monitor both income and spending.
The finance ministry has usually been considered to be a body in charge of government income, with the Directorate General of Budget, Accounting and Statistics taking care of the spending, she said.
But Liu said she will emphasize both aspects while pursuing her goal of achieving a balance between government income and spending.
Source: http://hedgeanalyst.com/china/2012/02/04/liu-discusses-possibility-of-windfall-tax/
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