Lawmakers review minimum-tax plan

The legislature's financial committee yesterday reviewed the Ministry of Finance's draft of the milestone alternative minimum tax (AMT) proposal but kept back the most important clauses for further discussion.

If passed in the committee, the proposal will be sent to the legis-lature for second and third readings before being put in practice.

During the two-hour committee meeting, lawmakers expressed different opinions on taxation rates and the starting points for individual and business income taxes. They also urged the inclusion of overseas nationals' income to achieve fair taxation.

The finance ministry's version of the AMT, which has been approved by the Cabinet, stipulates that taxpayers will have to pay either the general income tax or AMT, depending on their income, to circumvent high-income earners' efforts to evade paying tax.

The scheme rules that all businesses have to pay 10 percent tax on their annual income after deducting NT$2 million (US$59,500) from the total, and individuals will pay 20 percent tax on annual ear-nings after deducting NT$8 million.

Independent Legislator Chiu Yi (邱毅) argued that, based on the ministry's taxation scheme, the rule will apply to only 8,000 to 9,000 households, or 0.2 percent of individuals.

"The application rate is too low. There's no big significance [in the taxation system]," he said.

Chiu suggested the threshold for personal-income taxation should be lowered to NT$5 million, thereby doubling the households affected to replenish state coffers.

Democratic Progressive Party (DPP) Legislator Lin Chung-mo (林重謨) and Chinese Nationalist Party (KMT) Lawmaker Fei Hung-tai (費鴻泰) even suggested cutting the starting points to NT$4 million and NT$5 million, respectively.

While expressing diverse opinions on where the tax threshold should be set, lawmakers also ur-ged the ministry to include a "sunrise clause" to level tax on people's overseas income.

"Like taxing people's earnings from gambling, it might be difficult to tax overseas income but you have to enact relevant laws first, so that those evading paying taxes can be punished accordingly," DPP Lawmaker Julian Kuo (郭正亮) said.

KMT Lawmaker Lee Chi-chu (李紀珠) and several others proposed that a three-year sunrise clause should be included in the draft, which Minister of Finance Lin Chuan (林全) said was acceptable.

Lin said that deductions should be set at around US$10,000 or US$20,000 and complementary measures had to be mapped out.

Lin said the ministry achieved some breakthroughs yesterday but needs extra efforts to iron out different opinions, especially within the DPP, so the proposal can be passed by the year-end.

Separately, the committee yesterday passed a resolution to abolish three statutes governing the International Commercial Bank of China (ICBC, 中國國際商銀), the Farmers Bank of China (農民銀行) and Chiao Tung Bank (交通銀行) as these three banks have been privatized and the old laws are no longer applicable.

The committee also passed a proposal that Mega Financial Holding Co (兆豐金控) negotiate with the labor union of the century-old ICBC, that merged with Mega Financial in 2002, before changing its name to Mega Bank.