👩💼 Christina Liu’s “Iron-Willed” Elite Policy: The Logic Behind Not Reducing Transaction Tax
Today, I saw a news headline online: “Christina Liu is Iron-Willed: Absolutely No Reduction in Transaction Tax.” An excerpt from the content follows:
Liu stated that to avoid market distortion and disguised encouragement of investment behavior, the Ministry of Finance is working toward a direction that does not lower the securities transaction tax rate while levying a capital gains tax on futures. Regarding claims that no other country levies both taxes simultaneously, Liu cited South Korea as an example, calling such claims “misinformation.” She emphasized that the relationship between transaction tax and capital gains tax is “not a 1 or 0 issue.” When referring to international schemes, the public should conduct a comprehensive assessment of tax rates, deductions, and reporting thresholds. She pointed out that South Korea taxes major shareholders with a stake of 3% or more or a market value exceeding 250 million won, applying different rates based on the holding period. For legal entities, the capital gains tax is 22%. Liu noted that since the Taiwan plan only affects 1% of stock market heavyweights—meaning 99% of investors will not pay capital gains tax—“Why should the transaction tax be lowered?” Regarding the recent decline in market volume, Liu emphasized that the average daily volume from January to March was 100 billion TWD, and it remains at 78 billion TWD so far in April, claiming market volume is not abnormal.
📉 Questioning Trading Volume and Policy Logic
The report concludes with Dr. Liu’s belief that April’s volume of 78 billion TWD indicates a healthy market. However, everyone knows that the total trading days in January were so few they should be excluded from calculations. In my view, if the average volume for February and March was 150 billion TWD, dropping to 78 billion in April represents a sudden 50% cut. Even if this isn’t entirely due to the capital gains tax, I fail to see where Dr. Liu derives her conclusion that there is “no abnormality.”
Furthermore, Dr. Liu states that the two taxes are not a “1 and 0 issue” and uses South Korea as an example.
However, if she wants to disprove the “misinformation,” she should also explain cases of countries that do not levy both simultaneously. Why only bring up South Korea? What about Japan? The US? The UK? Moreover, she admitted that South Korea only targets major shareholders or those with massive profits, which is inconsistent with the current proposal in the Republic of China (R.O.C.) that targets “high-level investors” (while repeatedly lowering the tax threshold). Is she just trying to say: “See, some countries do it, you’re all talking nonsense”?
In the news, Dr. Liu tells us: “Absolutely no reduction in transaction tax; and next, we are targeting the futures market.” It seems my previous suspicion was correct: this “Securities Capital Gains Tax” was always intended as a “Wealth Tax.” Naturally, they won’t lower the transaction tax; they wouldn’t give up their existing “golden goose” just to chase new revenue.
🎨 The “Scribbled Blueprint” of Adding and Deleting
I previously noted that capital gains tax is acceptable, but the government must provide a blueprint for us to review, including how the funds will be used. This requires an elite internal team and rigorous discussion.
Instead, the current policy is shrouded in secrecy, constantly shifting as if trying to find the absolute limit of what the public will tolerate. All I see is a messy sketch with random additions and deletions. Since when did our country formulate policy by throwing out random ideas and then frantically clarifying, denying, or modifying them the moment there is backlash?
In this news cycle, Minister Liu also threw in the nearly forgotten issue of the futures market (shifting the focus randomly). With this wave after wave of media manipulation, it is hard to believe this is a “systematic and visionary plan.” I beg the honorable officials in government to act with appropriate professionality; after all, you have all been the “elites of the elite” your entire lives!
⚖️ The Biggest Flaw: Foreign Capital is Exempt
Regardless, I expect that if the government intends to tax domestic individuals and legal entities, it must also tax foreign capital (on domestic income). Tax thresholds need careful evaluation, and those paying capital gains tax should be offered incentives like transaction tax reductions. Everything needs to be viewed through a relative lens; there is never just one way of thinking.
However, the version the Executive Yuan intends to send to the Legislative Yuan sets a 4-million TWD threshold with a 200,000 TWD tax, yet foreign capital remains exempt (flips table).
Another mistake the government is making is its public, frequent emphasis that “this tax only targets super-investors, about 10% of investors.” Does the government not realize that while this 10% is small in number, their voice and social networks are far more powerful than the other 90%? Repeatedly framing it this way only reinforces their perception that they are being treated as “fat sheep” for slaughter.
Since Christina Liu says she does not encourage investment behavior, and the government doesn’t encourage people to keep money in banks (with interest rates nearing negative levels), why don’t you just give the money to me?