Authorities will likely raise tax rates on businesses, in order to improve the government's ailing finances and offset the effect of cuts to inheritance taxes, Minister of Finance Lin Chuan (
"Compared to European countries and the US, Taiwan's business tax rates are relatively low," Lin said at the Taipei-based business group's Third Wednesday Club in Taipei.
The club is made up of more than 50 top enterprises from across the country with annual revenues exceeding NT$20 billion each. Those companies include Chinatrust Financial Holding Co (
"We plan to increase the business tax rate by one to two percentage points above the current 5 percent rate," Lin said.
The amount of cumulative government debt soared to NT$2.6 trillion in 2000 from NT$600 billion in 1990, and the figures are expected to reach NT$3.9 trillion by the end of this year, Lin said, citing ministry statistics.
The government has been running deficits every year since 2000.
This year the budget deficit is estimated to reach some NT$300 billion.
The government predicts its deficit will total NT$292.9 billion next year, NT$11 billion narrower than that estimated for this year, the Executive Yuan said in a statement yesterday.
Tax revenue is expected to rise 6.1 percent from this year, it added.
Tax revenues used to contribute around 60 percent of the nation's annual budget, but the ratio has decreased to 50 percent in recent years because of the economic slowdown, Lin said.
Even so, the proposed increase in the business tax rate would be undertaken with caution in order to avoid harming economic development, he added.
In response to suggestions from entrepreneurs to cut or even revoke the inheritance tax, Lin said that a decrease in rates is inevitable, as excessively high marginal rates makes tax collection difficult.
However, revoking the inheritance tax altogether would be impossible, as it would provoke social controversy, he said.
An increase in business tax rates and a reduction of inheritance taxes are included in the midterm measures of the financial reform scheme approved by the Executive Yuan in April last year.
The midterm goals were scheduled to be carried out within one to five years after the scheme was approved.
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