Taiwan Looks At A Windfall Tax

by Mary Swire, Tax-News.com, Hong Kong

06 February 2012

Christina Liu, who will be Taiwan’s Minister of Finance in the cabinet reshuffle after the last month’s elections, has disclosed that she intends to appoint a committee to look at the government’s tax reform options, including a possible windfall tax.

The committee’s task would be to formulate tax policies with a dual objective – to provide additional budgetary revenues, but also to close a widening wealth gap in the Taiwanese economy. The imposition of the luxury tax on speculative property purchases, from June last year, could be said to have been the first part of such a policy package.

It has already been indicated that the government will, over time, change the basis of calculation of property taxes from officially-assessed to actual (and higher) market values. However, such a change might take some time to implement, as, before the measure can be made effective, local authorities will need to produce a registry of property transactions and their prices. On the other hand, a windfall tax on businesses or individuals with above-average profits or incomes might immediately fulfil both of the government’s aims, she said.

Liu made her comments after a conversation to discuss the government’s future policies with President Ma Ying-jeou. The new committee would examine the experience of other countries and consider all possibilities, but it was emphasized that new or further taxation would not be introduced unless the government was sure that it was acceptable to voters.

In the meantime, Liu strongly denied recent newspaper reports that she, or the President, was thinking of immediately imposing a separate capital gains tax in Taiwan. She felt that such a tax, or a levy on income from securities’ trading, could be detrimental to the development of Taiwan’s stock exchange.

Recommended