Thu, Jan 20, 2005 - Page 10 News List

High-income tax gets nod

By Joyce Huang  /  STAFF REPORTER

Business leaders yesterday raised no objection to Minister of Finance Lin Chuan's (林全) proposal to impose a minimum tax on high-income earners -- a tax that experts have long urged the government to implement.

"It's not a bad thing to comply with the principle of taxation fairness," said Rock Hsu (許勝雄), chairman of the Taiwan Electrical and Electronic Manufacturers Association (電電公會).

As long as such a tax proposal poses no threat to local industries' competitiveness, domestically or internationally, the private sector won't strongly oppose it, Hsu said.

As part of the government's long-term tax reform measures, Lin on Tuesday briefed the media about the ministry's plan to impose a minimum tax on high-income earners, who are in business-es that enjoy plenty of tax breaks.

"A minimum tax will further ensure fairness to all taxpayers, seeing that many high-income earners have unfairly enjoyed too many tax breaks," Lin said at a press conference on Tuesday.

The high-tech sector has often had fingers pointed at it, as the government gave the industry many tax breaks at its start-up stage to boost development. Some two decades later, the high-tech sector has become one of the nation's industrial pillars of strength while a group of new, rich high-tech entrepreneurs emerged, yet an inability to scrap the tax breaks started to hurt the government's coffers.

Yophy Huang (黃耀輝), a researcher at the Chung-hua Institute for Economic Research, therefore said that the ultimate way to have social justice prevail is to scrap all the tax benefits to industries that are no longer disadvantaged, including various business giants and the high-tech industries.

Lin, however, has vowed not to minimize existent tax benefits for many big businesses and high-tech industries if the yet-to-be-finalized new minimum tax proposal will be implemented.

Huang has long argued that high-tech industries have enjoyed far greater tax benefits than traditional industries, which is not only unfair, but also distorts the allocation of financial resources.

But, before the taxation ideal can be fulfilled, Huang said that he's all for the intermediate proposal of imposing a minimum tax on high-income earners so as to "narrow the gap between the rich and the poor."

Huang said that a minimum-tax system could negatively impact the nation's taxation system to such a degree that it could collapse, as had happened in the US.

He therefore suggested the calculation of an average tax to impose on high-income taxpayers, if their discounted personal income tax fall below the average tax rate.

Although the nation's business leaders expressed no opposition to Lin's proposal, they urged him to think again about the nation's economic and industrial development.

Chen Cheng-yi (陳正毅), spokesman for the General Chamber of Commerce (全國商總), said an overhaul of the nation's implementation of tax breaks is necessary.

But he said that the minimum-tax proposal is not perfect, since it only ensures a symmetric equality among high-income taxpayers despite a discrepancy in their personal earnings.

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