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Lawmakers protest price hikes, service reductions

TAIPEI, Taiwan -- In light of the Cabinet's proposed plans to raise the business tax on financial services from the current 2 percent back to the pre-2008 global financial crisis rate of 5 percent, lawmakers yesterday demanded the eight state-run banks not lay the impending burdens on consumers.

With the financial sector expected to be impacted by a loss of NT$30 billion in profits following the tax hike, lawmakers yesterday expressed concerns that financial institutions may seek to offset their additional tax obligation by retracting a number of more favorable offerings to consumers, such as reductions in credit card incentive programs and the raising of interest rates on loans.

Lawmakers stated that the financial sector has benefited tremendously from the government's policies aimed at safeguard enterprises and have seen record-high profits since the crisis, and so should comply to the timely adjustment as the nation commences a sweeping fiscal reform.

Lawmakers urged the eight state-run financial institutions to serve as bellwethers for the sector, and continue to serve consumers across Taiwan.

In response, Mega Holdings Co. (兆豐金控) stated that Taiwan's financial sector abides by the mechanisms of a free market, and that financial institutions will risk losing customers as they choose better offers from competitors. In addition, the company stated that with profits reaching NT$20 billion last year, the impact of the tax hike is estimated to be NT$1.075 billion, representing a paltry NT$0.09 decline in earnings-per-share performance.

Meanwhile, First Financial Holding Co. (第一金控), Hua Nan Financial Holding Co. (華南金控) and the Taiwan Cooperative Holdings Co. (合庫金控) remarked that they do not intend to adjust service terms and raise the cost of services it offers to consumers.

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