Thu, Jan 26, 2006 - Page 10 News List

Finance minister promises to promote tax reforms

By Jackie Lin  /  STAFF REPORTER

The new Minister of Finance yesterday said that he would urge the legislature to quickly pass the amendments to the Income Tax Law (所得稅法) to abolish tax-exempt status for military personnel, civil servants and public school teachers, adding that he would push forward the reforms on consumption and inheritance and gift taxes that had been initiated by his predecessor.

In his first press conference after assuming office yesterday, Minister of Finance Joseph Lyu (呂桔誠) vowed to diligently implement the government's financial and tax reforms.

"Based on the foundation laid out by former minister Lin Chuan (林全), I'll work with the ministry's outstanding team closely to fulfill our various tasks," Lyu told reporters last night.

"Policies should have lasting effects, and we'll continue to carry out the planned schemes as long as they are feasible," he said, adding that he would promote a policy of "vigorous teamwork and creative performances."

Faced with public concern about how he will be able to tackle tax reforms without having a taxation-related background, Lyu said that he will use team work to achieve a high level of policymaking.

Regarding the government's second-stage financial reform, Lyu said that the ministry will follow the same path to push forward business integration among the nation's banks.

The government last year promoted several mergers to halve the number of state-run banks to six, with three mergers remaining to be completed: state-controlled Taiwan Cooperative Bank's (合庫銀行) planned takeover of Farmers Bank of China (農民銀行), the Bank of Taiwan's (台灣銀行) planned acquisition of Central Trust of China (中央信託局) and Mega Financial Holding Co's (兆豐金控) goal of buying state-run Taiwan Business Bank (台灣企銀) this year.

To boost financial institutions' competitiveness, the government aims at downsizing the nation's 14 financial holding companies to seven before the end of this year. However, the plan faces a significant challenge due to the fact than only three of the nation's financial holdings firms are state-run.

Stressing that market mechanisms will be respected, Lyu said: "We'll adopt a rational, impartial and fair approach to releasing government-held shares in the hope of creating value and synergy in these companies."

However, when asked whether this means the three state-run companies Mega Financial, Hua Nan Financial Holdings Co (華南金控) and First Financial Holding Co (第一金控) will be absorbed by private-sector counterparts, Lyu said that it depends on operators' opinions.

"This should be evaluated case by case to see which [option, to merge or to be merged] has most value," he said.

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