Taiwan’s FSC concerned about new business tax

Says it would cut weak profits in an unfavorable economic environment.

Financial Supervisory Commission Chairman Chen Yuh-chang is questioning a proposal by lawmakers to raise the business tax on financial institutions to 5% from 2% to increase government revenues.

“While domestic financial institutions have improved their earnings ability in recent years, they lag behind their international peers in terms of return on assets and equity,” Chen said.

The government should instead craft comprehensive measures to strengthen its finances rather than increase the tax burden of any particular sector.

Pro-tax KMT lawmakers Chenyuhchangsaid financial institutions should stop enjoying favorable taxation now that average bad loan levels have dropped below 1% for two straight years.

They said a one percentage point increase in the business tax could generate an extra US$1 billion a year for the national treasury, which is struggling to keep different pension funds afloat.