A tax increase on share trading announced last week could add US$40 billion annually to government coffers, an amount almost equal to the official defense budget, the Financial Times reported. Stamp duties on share trading were raised from 0.1% to 0.3% last Wednesday, causing the market to drop 6.5%. Under the old tax rate, the government would have received US$20 billion; under the new rate, it could gain US$60 billion annually, an increase of US$40 billion. The higher stamp duty was designed to slow the market's momentum. Share
trading on the mainland has reached record levels this year, leading
some analysts to say the markets are overvalued.
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