Taiwan to levy controversial capital gains tax

Taiwan on Wednesday decided to levy capital gains tax on share trading, more than two decades after a previous attempt to do so sparked a plunge in the stock market and was eventually abandoned. The new measures, which will take effect in January, were passed by the 113-seat parliament, which is controlled by the ruling Kuomintang. The tax, which the government said was part of its efforts to ensure "social justice", has sparked waves of opposition from influential business groups and big stock traders, citing global economic sluggishness. The pressure has already forced the government to repeatedly revise the plan and brought down a finance minister. The finance ministry estimated the tax could benefit government coffers by up to Tw$11 billion ($365 million) a year, but critics have cast doubt on the figure as trading shrank in the last few months. In 1988 officials tried to introduce a similar levy but were forced to scrap it after the stock market slumped by more than 35 percent in a month. The tax plan is the latest attempt by President Ma Ying-jeou to close a growing gap between rich and poor -- part of his campaign platform when he was re-elected for a second and final term in January. -- Dow Jones Newswires contributed to this story --