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June 27, 2017

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Liu resignation awaits approval by Ma, Chen

Finance Minister Christina Liu (劉憶如) yesterday handed in her resignation over the great difference between the Ministry of Finance's (MOF) original version of the stock gains tax draft and the more recent Kuomintang (KMT) version. She is currently waiting for further directions from her superiors, namely Premier Sean Chen (陳冲) and President Ma Ying-jeou.

Chen met with Liu yesterday evening to discuss her resignation. According to Liu, she related to Chen her firm decision to step down. "This is a matter of beliefs," she said. "I will not turn back."

Liu said she would not be irresponsible and leave unfinished tasks to her successor, though she will be wrapping up her work while the Cabinet looks for a suitable person to take over her role.

It has only been 114 days since Liu took on the role of finance minister on Feb. 6. Under the progressive tax scheme, which was based on the principle of "fairness and justice," the MOF began promoting the implementation of a stock gains tax. On April 12, the MOF presented its draft of the tax to the Executive Yuan, and its version of the draft was passed on April 26. It was then sent to the Legislative Yuan on May 1. On the evening of May 28, the KMT's integrated version of the stock gains tax was issued.

Differences that Drove Liu Away

Liu had always maintained that it was for the purpose of establishing a fair system that she promoted the implementation of a stock gains tax. That she is asking to leave despite the successful establishment of the new taxing system, Liu explained, is because the KMT's version of the tax draft — which she believes will pass by October after party negotiations, if not by the end of the current legislative session in June — is fundamentally different from hers.

The KMT's integrated stock gains tax draft includes a slight increase of the stock transaction tax while including stockholders' gains from unlisted stocks as part of the income tax. In essence, under the KMT's proposal, those who make the largest gains on the main Taiwan stock exchange or over-the-counter market will not have to pay taxes on profits from stock transactions, contrary to the progressive tax scheme that Liu had hoped for.

Under the KMT legislative caucus proposal, "70 to 80 percent of the NT$10 billion in stock gains revenue will be contributed by individual investors, while big money makers will be free from taxation," Liu criticized. She believes that this simply wouldn't be fair or right.

Reactions within the KMT

The KMT legislative caucus expressed surprise at Liu's resignation, saying that Liu had previously left them with the impression that she was willing to come to a compromise with them at a joint meeting between the KMT's legislative and executive members on Monday.

"It seemed like Liu had accepted the caucus' decision; she said that she would respect the final decision and did not voice any opinions otherwise," KMT Legislator Tsai Cheng-yuan (蔡正元) said, yesterday.

Tsai admitted that he and fellow KMT Legislator Lai Shyh-bao (賴士葆) had been quite harsh toward Liu at the meeting on Monday. Lai had said that Liu could go her own way if she did not accept the KMT caucus' version of the tax draft, and Tsai had argued that the party could take the Executive Yuan's draft and the party caucus' draft for a vote in the Legislature. He said the person responsible for whichever draft that was not passed ought to resign.

KMT Policy Committee head Lin Hung-chih (林鴻池) and KMT lawmaker Alex Fai (費鴻泰) also described Liu's resignation as unexpected, saying that the KMT caucus did include her opinions while adjusting its final stock gains tax draft during the meeting on Monday, and that Liu had seemed perfectly at peace with the process at the time.

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