Insurance chairman calls for axing gift, inheritance taxes

The government should reduce or even cancel inheritance and gift taxes to stem capital outflow and narrow the gap between rich and poor, said Chu Ping-yu (朱炳昱), chairman of Taiwan Life Insurance Co (台灣人壽).

Capital outflow to date this year is estimated at US$300 billion to US$500 billion, as businesses and individuals search for better investment returns and look to avoid heavy taxes, Chu said.

revenue rise

If the government axed the inheritance and gift taxes altogether, tax revenues could jump by NT$200 billion (US$6 billion) a year, compared with annual revenues of NT$23 billion from inheritance taxes, Chu was quoted as saying by the Chinese-language Liberty Times (the Taipei Times' sister newspaper) yesterday.

He made the remarks on the sidelines of an insurers' summit in Kunming, China.

Chu added that even if the taxes were cut by 10 percent from the current 50 percent, the maximum rate, some of the capital would naturally return to Taiwan.

Hong Kong's experience serves as a good model, he said.

effective

The Hong Kong government revoked the inheritance tax last year, and its tax revenues rose by about 20 percent, proving the effectiveness of the policy, Chu said.

The Ministry of Finance favors retaining the inheritance and gift taxes as Taiwan does not levy taxes on capital gains. Minister of Finance Ho Chih-chin (何志欽) has said that the inheritance and gift taxes can be lowered to encourage capital returns, but must not be abolished.

Chu also gave a rosy outlook for the nation's first local insurer, thanks to the strong performance of the local bourse this year.

The insurer reported net profits of NT$1.67 billion for the first five months of the year, already surpassing its full-year net income last year. Earnings per share for the first half of the year are expected to exceed NT$4, he said.