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EDITORIAL: Capital
gains tax: Ma doesn¡¦t get it
Hon Hai Group chairman Terry Gou (³¢¥x»Ê), who has been an outspoken champion of
many things, last week told President Ma Ying-jeou (°¨^¤E) that the government¡¦s
plan to tax capital gains on securities investments was inappropriate and that
there were more pressing issues for the government to deal with.
On Wednesday last week, Gou held a press conference to call on the government to
impose higher taxes on him and 300 fellow wealthy Taiwanese, whom he said would
be willing to pay more tax if the government could bring deliberations over the
controversial capital gains tax plan to a close and pay more attention to
economic development instead.
Gou, whose personal fortune was estimated at US$4.8 billion by Forbes this year
¡X making him Taiwan¡¦s fourth-richest tycoon ¡X reckoned that his plan would
contribute an additional NT$18 billion (US$600 million) in annual revenue to the
national coffers ¡X higher than any of the capital gains tax proposals presented
by ruling and opposition lawmakers.
However, Gou¡¦s proposal of imposing a higher tax on the wealthy sounds naive and
impractical, both in terms of how to define wealth and whether the planned taxes
would have an adequate legal basis. Therefore, Gou¡¦s plans are unlikely to
convince the government to scrap its planned capital gains tax.
However, there is no question that Gou dislikes the current tax discussion and
resents certain government policies, including allowing hikes in electricity and
fuel prices.
Gou is not alone in this regard. Several business leaders have recently
criticized the government for failing to prioritize matters dealing with
Taiwan¡¦s national development problems. Farglory Group chairman Chao Teng-hsiung
(»¯Ãö¯) last week warned again that Ma¡¦s ¡§golden decade¡¨ national development plan
would achieve nothing, or would fare even worse, if Taiwan is left to sail
through turbulent global economic waters under the directionless Ma
administration.
While the government and the legislature are unlikely to follow up on Gou¡¦s
wealth tax proposal any time soon, moves by the tycoon ¡X in addition to other
business leaders who recently objected about government policies ¡X have
political implications and help underline potential shifts in perceptions of
class in Taiwan.
The government¡¦s tax reforms have, thus far, appeared to target rich people in
the name of social justice and fairness, but they may also have had the unwanted
side-effect of increasing conflict between rich and poor.
Friction between wealthy and impoverished Taiwanese has been less of a problem
than in many other countries, given Taiwan¡¦s relative prosperity. There is also
a widespread belief that if they work hard, people can one day become rich.
Nonetheless, stagnating wages and the government¡¦s poor management of the
capital gains tax issue have helped highlight Taiwan¡¦s growing income
inequalities.
While the wealthy may be opposed to a capital gains tax, the measure seems to
have found few advocates from less well-off sectors of society, making reform
more difficult to achieve.
If businesspeople continue to pan the government over the tax issue, and if that
prompts Ma and the Chinese Nationalist Party (KMT) government to again revise
their tax proposal, then the government would have proven itself to be one that
lacks determination and simply acts to win votes.
In recent years, Gou has not been shy to vent his anger at people or companies
he dislikes. However, he tried to remain courteous by holding back in his recent
criticism of the government. His wealth tax idea might be a little far-fetched,
but while he may have failed to clearly state it, most people are reading his
comments as a message that the government is not only cash-strapped, but also
incompetent and inefficient. Now do you get it, President Ma?
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