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Inheritance, gift tax laws should be overhauled: MOF

Inheritance and gift tax laws should be overhauled but must not be abolished in the interest of fair taxation, the Ministry of Finance (MOF) said yesterday during a public hearing on the issue.

Based on the suggestions submitted by the Cabinet's financial reform committee, the ministry has advocated reducing the maximum marginal rates of inheritance and gift taxes from 50 percent to 40 percent to match that of the income tax.

Minister of Finance Ho Chih-chin (何志欽) had previously said such fine tuning would cause a drop in tax revenues of NT$6 billion (US$183.2 million) annually.

The government now collects around NT$30 billion from inheritance and gift taxes a year.

While most academics at yesterday's hearing expressed support for the ministry's view, lawmakers disagreed.

Democratic Progressive Party (DPP) legislators Hsueh Ling (薛凌), Hou Shui-sheng (侯水盛) and Chen Chin-te (陳金德) said the gift and inheritance taxes should be scrapped.

Since the Alternative Minimum Tax (AMT) scheme has been implemented, Hou said personal income should not be taxed more than once and the inheritance and gift taxes should be cut to zero.

Tseng Chu-wei (曾巨威), a professor of public finance at National Chengchi University, said he did not oppose slashing the two taxes or even revoking them, but this was not the right time to do it because it would sabotage the nation's original tax scheme.

But he suggested overhauling both income tax regulations and the gift and inheritance tax rules to establish a better system.

Yophy Huang (黃耀輝), associate professor of public finance and tax administration at the National Taipei College of Business, backed the ministry, saying that the maximum marginal rates should be dropped to 40 percent to avoid causing a gap with the income tax.

While some developed nations have canceled inheritance and gift taxes, they have also adopted complementary measures or other methods to levy similar taxes. If the government was too quick in abolishing such taxes, the revenue gap would deal a huge blow to local governments' finances, he said.

The Chinese National Federation of Industries (全國工總) suggested that the tax-free threshold be raised from NT$10 million to NT$30 million and incentives be provided to lure capital back to Taiwan.

The Chinese National Association of Industry and Commerce (工商協進會) insisted that the taxes should be annulled.

The ministry decides to submit an amendment to the Estate and Gift Tax Act (遺產及贈與稅法) — based on the financial reform committee's version — to the Cabinet for approval before the next legislature reconvenes in September.
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