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Transaction tax halved for six months

BID TO BOOST BOURSE: The 0.3 percent securities transaction tax will be cut in half for six months in a bid to boost the local stock market as it did in 1989 and 1993
　

By Shih Hsiu-chuan
STAFF REPORTER
Thursday, Sep 11, 2008, Page 1

Vice Premier Paul Chiu (邱正雄) last night announced that the securities transaction tax would be cut from 0.3 percent of the transaction price to 0.15 percent for half a year.

“Capital market is an important part of the financial market and an essential channel for businesses to raise funds … to help businesses raise funds in a slackening economy, restore stock investors’ confidence and help the stock market sail through the international economic quagmire,” Chiu told a news conference held at 10pm.

As the 0.3 percent tax rate is stipulated by Article 2 of the Securities Transaction Tax Act (證券交易稅條例), the Executive Yuan will propose an amendment to the legislature for review.

Chiu said the reduction in the stock exchange tax can help boost the stock market, as shown when the turnout rose to NT$121.7 billion from NT$ 3.3 billion a year after the stock exchange tax was cut in half in Jan. 1989 and the turnout increased to NT$101.267 billion from NT$22.553 billion a year after the tax was cut in half in Feb. 1993.

The decision to slash the securities transaction tax was reached after a three hour meeting between ranking officials held at the Presidential Office late yesterday afternoon.

President Ma Ying-jeou (馬英九) met Premier Liu Chao-shiuan (劉兆玄) and economic officials at 5:30pm to deal with the controversial issue of whether the securities transaction tax should be scrapped in a bid to revive the stock market.

After promising to take a backseat on domestic affairs, Ma was forced to deal with the issue when the officials brought their proposal for his approval yesterday afternoon.

Vice President Vincent Siew (蕭萬長), who recently voiced concerns over the Cabinet’s ability to cope with the current economic downturn, was also at the meeting.

Some Chinese Nationalist Party (KMT) lawmakers have suggested Siew replace Liu and reshuffle the Cabinet, while Legislative Speaker Wang Jin-pyng (王金平) have recommended that the Cabinet consult Siew more frequently on economic and financial matters.

Noting Siew’s rich experience in the field of economics, Ma lauded Siew as a “problem solver” who could deal with the nation’s economic ills when he announced his choice of a running mate in late 2006.

Some KMT lawmakers have complained that Siew has never been given a chance to put his strengths to work.

Slashing the stock transaction tax, which currently stands at 0.3 percent, is one of the measures under consideration to boost market sentiment, following a spate of suggestions from the business community and the equity market’s dismal performance.

The issue became a subject of controversy when Minister of Finance Lee Sush-der’s (李述德) remarks at a news conference on Monday were widely interpreted by local media as meaning the government would cut the stock transaction tax.

At the request of the Executive Yuan, the ministry issued a statement later that night revising Lee’s remarks, saying it has yet to reach a decision on the matter.

Some have questioned the need to cut the stock transaction tax as the country doesn’t impose a levy on capital gains from securities. It could also result in a loss in tax revenues of NT$60 billion (US$1.88 billion) per annum if the tax were cut in half.

The stock transaction tax will be one of the economic proposals to be discussed at the Cabinet meeting today, where a review of new tax incentives to encourage businesses investment, interest subsidies for housing loans and other measures aimed at propping up the economy will be conducted.

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Chinese asylum seekers climb into AIT compound
　

WORD GAMES: The MAC said the men were not telling the truth by saying Taiwan rejected them, because the country has no legislation to grant them refugee status

Thursday, Sep 11, 2008, Page 2

By Loa Iok-sin Staff Reporter Three Chinese democracy activists living in Taiwan climbed over the wall at the American Institute in Taiwan (AIT) in Taipei yesterday in an attempt to seek political asylum.

Cai Lujun (蔡陸軍) and Wu Yalin (吳亞林) climbed into the AIT compound at around noon yesterday, while another Chinese dissident, Chen Rongli (陳榮利), stood by outside with a video camera.

Cai, who wrote articles in China criticizing the Chinese Communist Party (CCP), was arrested and imprisoned for three years on charges of “inciting subversion of state power.”

After being released from prison in 2006, Cai entered Taiwan illegally to seek asylum, but his request was rejected by the Mainland Affairs Council (MAC) in July.

Wu said he was jailed in China for nine years for protesting the results of a local election in his native Sichuan Province. Wu had said that the results were rigged by local CCP officials.

After he was warned that he would be sent to a labor camp for distributing pamphlets criticizing the CCP, he escaped to Taiwan through Thailand last December.

Chen was often harassed and watched by police for criticizing the Chinese government and eventually left for Taiwan via Kinmen to seek political asylum. His request was also rejected.

“We climbed over the wall between AIT and a vocational school next door — there was no security guard at all,” Wu told the Taipei Times via telephone after he was escorted out of the AIT compound by police.

“We are trying to seek political asylum from the US because our application for asylum has been rejected by the MAC several times,” Wu said, adding that the MAC told them that their applications were rejected because “there is no law to grant political asylum to anyone in Taiwan.”

After Wu and Cai entered the compound, they expected to be escorted from the premises and arrested immediately. Instead, the waited for two hours without anyone noticing them, they said.

“We stayed inside AIT’s walls for about two hours and then decided to call human rights organizations for help,” Wu said.

Amnesty International Taiwan secretary-general Wang Hsing-chung (王興中) said the men had called the organization.

“After Wu consented to it, I called AIT to notify them” that the men were in the compound, Wang said. “Then we sent a fax to AIT asking it to respect the rights of Cai and Wu and allow them to be accompanied by attorneys if they were to be questioned.”

Wu said AIT officials rejected their request to seek asylum and only asked a few questions about their identities and background before releasing them.

Meanwhile, a MAC official who asked to remain anonymous said Cai and Wu entered Taiwan illegally and fell under the Statute Governing the Relations between the Peoples of the Taiwan Area and Mainland Area (台灣地區與大陸地區人民關係條例).

Although the government cannot grant them asylum, the MAC had been assisting them in seeking political asylum in a third country and seeking help from the UN refugee agency, the official said.

The official said Cai and Wu were spreading false information about the MAC by saying Taiwan had rejected their request for asylum.

AIT yesterday declined to comment.
　

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‘Non-state to state’ risks ‘status quo’
　

Lai I-chung 賴怡忠
Thursday, Sep 11, 2008, Page 8

President Ma Ying-jeou’s (馬英九) first interview with an international media outlet after the end of the Beijing Olympics sent shock waves through the international community after he said cross-strait relations are a “non-state-to-state special relationship.”

Ma’s proclamation of Taiwan’s position forgoes the sovereignty that former presidents Lee Teng-hui (李登輝) and Chen Shui-bian (陳水扁) insisted on following democratization of the country, and firmly returns Taiwan to the “one country, two governments” or the “one country, two regions” framework.

Ma’s move is tantamount to a unilateral change to the “status quo” that will have a serious impact on cross-strait relations, Taiwan’s international exchanges and the future of Taiwan’s democracy. The cross-strait “status quo” may change by 2012, just as the international community fears.

Ma defined the relationship between Taiwan and China as a “non-state-to-state special relationship.” If we combine this proposition with the “one China with different interpretations” and the idea that Taiwan is not a country but a region, Ma is clearly telling the world that Taipei recognizes Taiwan as a part of China, and that both Taipei and Beijing are two governments in “one China” and that this is why the special relationship came about.

This is also evidence that Ma shares the Chinese Nationalist Party (KMT) view that the cross-strait relationship is a matter of “one country with two governments” as articulated by KMT Vice Chairman John Kuan (關中) at the Brookings Institution in March 2006.

Ma’s proposed concept is that cross-strait relations take precedence over diplomatic relations and that his “diplomatic truce” inform not only Taiwan’s international strategy and diplomatic tactics, but also its standing on the international stage. If Taiwan were part of China, cross-strait relations would be more important than diplomatic relations and Taiwan would no longer need to maintain diplomatic relations.

China should be pleased with Ma’s proclamation because it also means the Taiwanese government has accepted the “Anti-Secession” Law and recognizes that the Civil War is ongoing, which means that the two sides have yet to achieve de facto unification but that de jure unification is already a fact.

If the government has accepted that Taiwan is part of China, Taiwan is, legally speaking, no different than a separate region controlled by a local warlord. This gives more legitimacy to Beijing’s demands that other countries not recognize Taiwan; that approval from Beijing is required for Taiwanese applications for membership in international organizations; and that the US not sell weapons to rebellious Taiwan.

Internationally, Ma’s declaration implies a unilateral change to the “status quo” and a direct proclamation of de jure unification. This would return Taiwan to the zero-sum game situation under dictator Chiang Kai-shek (蔣介石) and his son Chiang Ching-kuo (蔣經國), where the existence of one ruled out the existence of the other.

The only difference would be that while the Chiangs took a scorched earth approach to diplomacy, Ma is asking for a diplomatic truce. Allies that have started to waver in their support for diplomatic ties with Taiwan may ditch Taiwan in the near future.

International organizations that have recognized Taiwan as a member will probably also soon demand that Taiwan surrender its membership. China can also demand that Taiwan’s representative offices in countries that are not diplomatic allies be put under the management of Chinese embassies, or request that this property be allocated to China.

Ma’s biggest problem lies in the fact that his proposition is not recognized or accepted by the majority of Taiwanese. The Mainland Affairs Council conducted a poll three months after the presidential election and found more than 70 percent of the public supports the view that Taiwan and China are two sovereignties that do not belong to each other. Ma’s proclamation to the international community will cause fierce controversy on this matter.

The KMT defended Ma’s proposition using the “Constitutional one China” formula and the Statute Governing the Relations Between the Peoples of the Taiwan Area and the Mainland Area (兩岸人民關係條例), but this only proved that the statute needs to be amended to reflect Taiwan’s status as a democracy.

What should be of concern, however, is whether severe harm to cross-strait relations and Taiwan’s international exchanges and democratic development caused by Ma’s declaration of “one country, two governments” will prompt the cross-strait “status quo” to be changed by 2012.

Lai I-chung is an executive committee member of Taiwan Thinktank and former director of the Democratic Progressive Party’s Department of International Affairs.

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Promises on the economy fooling us, fooling Ma
　

Lin Chia 林洽
Thursday, Sep 11, 2008, Page 8

When President Ma Ying-jeou (馬英九) clarified his “6-3-3” economic platform (GDP growth of 6 percent, 3 percent unemployment and per capita income of US$30,000) by saying the targets were to be achieved by 2016, his statement provoked accusations of reneging on election promises and sparked a sell-off on the stock market.

On Sept. 5, he again changed his tune, saying: “The US$30,000 target was always set to be achieved by 2016. The other two targets can be achieved within my first term.”

What Ma is telling us is that while we have to wait until 2016 for the US$30,000, his government will have a go at reaching the other two goals by 2012.

I find myself doubting whether Ma really understands his own policies, or what his repeated adjustments really mean in economic terms.

First, with regard to the economic growth rate, the original target of Ma’s election platform was presumably to maintain an average annual growth rate of 6 percent for four years, rather than to achieve 6 percent growth only in the last year of his term.

Leaving decimal points aside and speaking in terms of simple interest, if GDP were to fall 6 percent for each of the first three years of Ma’s term — thus shrinking 18 percent over the whole three years — only to grow by 6 percent in the fourth year of his term, would that mean that Ma’s economic policy had achieved its target? Of course not, because Taiwan’s economy would have declined by 12 percent during Ma’s presidency. Any president with such a record would surely be kicked out of office.

If, on the other hand, Ma means that he can maintain 6 percent growth on average over four years, then the target is unattainable. Why? Because if the growth rate falls below 6 percent in the first year, then it gets that much harder to achieve 6 percent average growth over the four years.

For the first 12 months for which Ma can be held accountable, that is, from his inauguration on May 20 to May 20 next year, it is already clear that the economy will grow by less than 4 percent. That means that growth would have to be 6.7 percent or more in each of the following three years to reach an overall average of 6 percent. Judging by Taiwan’s economic performance in recent years, GDP will not grow by 6.7 percent annually for those three years.

Second, Ma wants to bring unemployment down below 3 percent, which of course means keeping it below 3 percent on average over the four years, rather than only in the last year. To illustrate the point: if the unemployment rate in each of the first three years of Ma’s presidency were to be 10 percent, and then in the fourth year it were to come down to 3 percent, it would mean that many people were unemployed for the first three years and only found work in the fourth year. In Taiwan’s case that would not be an admirable achievement, but rather a miserable one, so it cannot be what Ma has in mind.

What we have seen, though, over Ma’s first 100 days in government, is that the employment situation keeps deteriorating. The target of bringing unemployment down far enough in the next three years to achieve an average of less than 3 percent for Ma’s term is, therefore, mere wishful thinking.

Third, if Taiwan’s per capita income for this year is US$18,000 and the figure grows by 6 percent each year, then in 2016 it would be US$28,689 — not far short of the promised US$30,000. If, however, the target is not met, then real per capita income would not reach US$30,000 even by the end of a second term in office, 2016.

In conclusion, either Ma is fooling himself or he is trying to fool the rest of us.

Lin Chia is an independent commentator.