O how beautifully staged! Finance Minister Christian Liu offers to resign because -- in a move no one could have predicted -- the legislature has gutted the proposed capital gains tax....
Minister of Finance Christina Liu (劉憶如) offered to resign yesterday after a capital gains tax she enthusiastically proposed was rejected by Chinese Nationalist Party (KMT) lawmakers at a meeting on Monday.Readers will recall that Christina Liu was one of the front people for the smear of Tsai Ing-wen over the TaiMed case before the election. I thought she might resign then, but she didn't. Perhaps they were preserving her for this moment... she resigns to show that the Administration is Serious About Capital Gains Tax and the legislature then does what the KMT really wants to do -- remember that the legislature is controlled by the KMT and President Ma is Chairman of the KMT Party. All of this is just political theater for the masses: when the smoke clears, capital gains of major earners will still not be taxed, but the Administration can say it tried but alas, couldn't get the perfidious legislature to do what it wanted.
The KMT caucus proposal was far from meeting her expectations of the ability-to-pay principle, because major earners in the stock market would not be required to pay a capital gains tax under this version, she said.
The WSJ has a very detailed discussion from the redoutable Jenny Hsu. It observes:
"The KMT's proposal apparently favors stock investors and conglomerates which have big positions in the market," said Kevin Wang, an economist at Taishin Securities, who added, "It would be embarrassing to Liu if she stays on."Naturally, the stock market spiked nearly 3% on the news that KMT legislators were making law on behalf of the 1%.
To complete the cycle, another round of polls will show that the public believes the legislature is the worst public institution in Taiwan, watchdog bodies will publish stern reports, and in the next election, the legislators will all be returned to their seats. Us observers of Taiwan politics will then shake our heads and retire to commiserate with our friend Jack Daniels.
This political theater has another function: with all the focus on the capital gains tax, people have stopped discussing another driver of income inequality -- the assessment of land value, which has not changed since 1987.
Speaking of theatre, how about those F-35s? Last week J Michael Cole in The Diplomat argued that discussion of F-35s was there to take the focus off F-16s and enable the KMT to procrastinate about getting fighter jets as it has now for a decade. By shifting the demand to F-35s, which Taiwan can't afford and which it will never get, the KMT can plausibly claim that it is looking out for the defense of Taiwan. Sure enough, just today the TT reported:
F-35 stealth fighters are the new-generation combat aircraft that best serve the nation’s air defense needs, a military official said yesterday, the latest hint that the government might not be as keen to acquire the F-16C/Ds it has been requesting for years.It was the DPP government that requested the 66 F-16s, which the US doesn't want to sell, and which the KMT government doesn't want. Keep your eye on the ball -- if at the end of another four years, we have no new fighters, the function of talking about F-35s should become clear.
The only positive interpretation is that the talk of F-35s is for China's benefit, to enable the US to sell Taiwan F-16s as a "consolation prize." Well, we couldn't get F-35s but at least we got something. But I really don't believe that...
- Speaking of theater, Bo Xilai allegedly paid mega-star Zhang Ziyi to have sex with him. Struck fear into the Communist Party of China, accumulated vast fortune, slept with smoking hot mega-stars. Bo Xilai is my new hero.
- Changhua farmers once again protest water diversion for the science park. There just isn't enough water in Changhua for everyone's needs....
- Ma government to send off tech crown jewels to China. Of course....
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