Pushing tax reform will undoubtedly provoke criticism and reaction, but the government should prioritize its plan to overhaul the most controversial tax regulations before adding to the general public's tax burdens, pundits said yesterday.
To achieve what it has pledged in terms of fair taxation and social justice, the government should pull out all the stops to cancel the tax-free status for teachers and military personnel, and establish a minimum tax scheme for both companies and highly paid individuals, they stressed.
"Tax reforms involve the re-arrangements of interests and therefore authorities will meet with a mountain of challenges. But it must not be afraid of offending the minority of interest groups in order to safeguard the benefits of the majority," said Tseng Chu-wei (
President Chen Shui-bian (
The national taxation rate is a gauge of a nation's tax burden divided by its GDP. Taiwan's tax requirements pale in comparison to those of members of the Organization for Economic Cooperation and Development (OECD), whose national taxation rate is about 27 percent.
CHEN'S IDEAS
To achieve his goal, Chen said the value-added tax should be raised in the near future by 2 to 1 percentage points from the current 5 percent, a minimum tax scheme should be imposed and inheritance and gift taxes should be trimmed from 50 to 40 percent to boost investment.
These measures, however, have been widely criticized as robbing the poor and giving to the rich. Increasing the value-added tax rates would be reflected in commodity prices, so this is seen as a hidden tax on the general public.
Although the prices of some products might be hiked after the new regulation is put in practice next year, manufacturers' tax costs may not be entirely transferred to consumers due to fierce competition, the Ministry of Finance said.
Furthermore, daily necessities such as fresh food, agricultural products and rice are exempt from value-added taxes and won't be affected by the new measure, the ministry said.
However, People First Party Legislator Christina Liu (
She suggested that luxury goods be charged a higher tax, and that consumer products that are used on a daily basis, such as medicine, should be free from the tax.
Opposition lawmakers have also raised concerns that boosting the value-added tax when the economy is not at its peak might create the "Hashimoto effect" seen in Japan eight years ago.
`HASHIMOTO EFFECT'
In April 1997, then Japanese prime minister Ryutaro Hashimoto raised the consumption tax from 3 percent to 5 percent in a bid to bail out the Japanese economy. At the time Tokyo's debts accounted for 70 percent of the GDP.
However, imposition of the tax battered consumer confidence and consumption contracted, speeding up the nation's economic downturn and leading to Hashimoto stepping down the following year.
Shia Ben-chang (謝邦昌), a professor of statistics and information science at Fu Jen Catholic University, voiced concern that the government might have overlooked the impact such tax increases have on salaried employees.
"Levying more taxes on the general public while opening big holes to inject capital into the bank bailout fund, BOT (build-operate-transfer) projects and military weapons procurements is a questionable policy," Shia said.
He urged the government to take into consideration the different welfare structures and economic circumstances in this country and other nations before trying to follow international trends.
However, Tseng said that raising the value-added tax, as opposed to income taxes, is acceptable -- from a professional point of view -- given that advanced nations are working to increase their consumption tax
Compared with an OECD member nation's average consumption tax of 20 percent, Taiwan does have some room to adjust its tax, Tseng said.
"The main point is that President Chen should have the guts to sacrifice the interests of the minority by levying a minimum tax on rich people and companies in order to narrow the widening gap between rich and poor," he said.
"That being done, imposing a higher value-added tax will not incur a strong backlash because the general public will believe the government is sincere in promoting equitable taxation," he said.
BYPASSING CHINA TARIFFS: In the first five months of this year, Foxconn sent US$4.4bn of iPhones to the US from India, compared with US$3.7bn in the whole of last year Nearly all the iPhones exported by Foxconn Technology Group (富士康科技集團) from India went to the US between March and last month, customs data showed, far above last year’s average of 50 percent and a clear sign of Apple Inc’s efforts to bypass high US tariffs imposed on China. The numbers, being reported by Reuters for the first time, show that Apple has realigned its India exports to almost exclusively serve the US market, when previously the devices were more widely distributed to nations including the Netherlands and the Czech Republic. During March to last month, Foxconn, known as Hon Hai Precision Industry
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and the University of Tokyo (UTokyo) yesterday announced the launch of the TSMC-UTokyo Lab to promote advanced semiconductor research, education and talent development. The lab is TSMC’s first laboratory collaboration with a university outside Taiwan, the company said in a statement. The lab would leverage “the extensive knowledge, experience, and creativity” of both institutions, the company said. It is located in the Asano Section of UTokyo’s Hongo, Tokyo, campus and would be managed by UTokyo faculty, guided by directors from UTokyo and TSMC, the company said. TSMC began working with UTokyo in 2019, resulting in 21 research projects,
Taiwan’s property market is entering a freeze, with mortgage activity across the nation’s six largest cities plummeting in the first quarter, H&B Realty Co (住商不動產) said yesterday, citing mounting pressure on housing demand amid tighter lending rules and regulatory curbs. Mortgage applications in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung totaled 28,078 from January to March, a sharp 36.3 percent decline from 44,082 in the same period last year, the nation’s largest real-estate brokerage by franchise said, citing data from the Joint Credit Information Center (JCIC, 聯徵中心). “The simultaneous decline across all six cities reflects just how drastically the market
Ashton Hall’s morning routine involves dunking his head in iced Saratoga Spring Water. For the company that sells the bottled water — Hall’s brand of choice for drinking, brushing his teeth and submerging himself — that is fantastic news. “We’re so thankful to this incredible fitness influencer called Ashton Hall,” Saratoga owner Primo Brands Corp’s CEO Robbert Rietbroek said on an earnings call after Hall’s morning routine video went viral. “He really helped put our brand on the map.” Primo Brands, which was not affiliated with Hall when he made his video, is among the increasing number of companies benefiting from influencer
RSS