From: ccchao@cco.caltech.edu (Chi-chao Chao)
Newsgroups: soc.culture.taiwan
Subject: Re: fraudulent transaction price (Re: More info about land tax issues please)
Date: 27 Sep 1992 07:26:30 GMT
Organization: California Institute of Technology, Pasadena
NNTP-Posting-Host: alumni.caltech.edu

In article <5170@rosie.NeXT.COM> ccliu@amy.next.com (Chang-Chi Liu) writes:
>In article <19pjqnINNd21@gap.caltech.edu> ccchao@cco.caltech.edu (Chi-chao  
>Chao) writes:
>> In article <5039@rosie.NeXT.COM> ccliu@amy.next.com (Chang-Chi Liu)  
>writes:
>> >In article <2AB84927.29855@news.service.uci.edu> tao@balboa.eng.uci.edu  
>> >(Eric Yihching Tao) writes:
>> >> In article <lbfjd5INN2v7@exodus.Eng.Sun.COM>  
>stlin@stevelin.Eng.Sun.COM  
>> >(Steven Lin) writes:
>> ><<info about real estate trasaction in the U.S. >>
>> >
><<it is technically possible to trace false transations >>
>Maybe so for a couple of really dumb and rich guys.  People can be very  
>creative when large amount of money is involved.  There is a term "Five  
>ghosts' moving magic", used to describe many indirect ways to cover the  
>trail or hide the money.  
>
>My concern is that any law must be enforced fairly, which is not an easy  
>thing to do especially in Taiwan.  Ususally, the richer one is, the more  
>resourceful he evades tax.  The same is true everywhere.  But in the U.S.,  
>due to a highly computerized financial system and different business  
>transaction patterns, it is more difficult to cheat for the big guys.  The  
>IRS audit rate is much higher for high income persons and SEC monitors any  
>stock transations over $10,000 for possible inside trading. 
>
>I have been away from Taiwan too long to really know the details of  
>anything. My impression is that Taiwan has not been able to collect income  
>tax and sales tax in a fair way.  Inside trading is blatant. Tax based on  
>profit is very fair on the paper.  In reality, it could rob away  
>once-in-a-life profit from a poor farmer while the tycoons would not be  
>affected.  The old saying "hitting the flies not the tigers" had been true  
>for a while.   It always boils down to the effectiveness and fairness of  
>the justice system.  Maybe things are better now.  If so, Taiwan is on her  
>way to become a truly developed nation.

In Taiwan, many laws are not enforced fairly NOT BECAUSE OF TECHNICAL 
INFEASIBILITY OF IMPLEMENTATION but because of the economical/political 
powers which back up the affected groups.  There are also many laws unfair
in nature. 

IMHO, the tax system in Taiwan is quite unfair.  Capital gain from the
stock market is legally tax-free and under the current system gain from
land transactions is (in most cases) technically tax-free (or taxed less 
than 1%.)  One example cited by the Ministry of Finance is that last year
one company in Taipei made profit of almost NT$ 2,000,000,000 in a single
land transaction.  Guess how much tax tey paid?  0 (A big zero)!  And 
that was perfectly legal under the current system.  If all those gains 
are legally exempt from tax, how can it be justified that every cents
from ordinary people's salaries are subject to tax?

Farmer lands are treated differently from ordinary lands now and will 
be in the proposed policy.  Under the current system, (if my memory is 
correct,) they are exempt from the land appreciation tax and can only be
traded to farmers.  In reality now the farmers get all of their "once-in
-a-life" profits, but usually the profits are very very small compared to 
what big capitalists can get after they change the framer lands into 
resident lands and under the current system those profits are almost 
tax-free.  One example cited frequently is what Mr. Lin Rong-San 
(now VP of Control Yuan) gained from his "Long Shan Lin" project: 
almost NT$ 10,000,000,000 and almost no tax.  Farmer lands and ordinary 
people's lands (on which if they live) will be treated differently from 
other lands in the proposed policy of Ministry of Finance.  They are not 
what the new policy targets.

From what I read from newspapers, the Ministry of Finance seems to very 
confident about its ability of tracing down the real prices of large 
transactions.  Consider other factors such as the buyer's unwillingness 
to report a lower transaction price to avoid increasing the tax when 
he/she sells.  My feeling is that when there are some people who try 
to make our tax system a little bit fairer and DARE to challenge those 
who made the price of housing intolerable in Taiwan in the past several 
years and the back-up political/economical monsters, why not give them 
some support? 

However, frankly speaking, disregarding the feasibility of implementation,
just looking at the political/economical reality in current Taiwan, 
I personally is quite pessimistic about the fate of the proposal by 
Ministry of Finance.

--
Chi-chao Chao
ccchao@alumni.caltech.edu
ccc@ee.nthu.edu.tw
Newsgroups: soc.culture.taiwan