The government could lose more than NT$300 billion (US$9.3 billion) in annual tax revenues should it implement the tax cuts to be proposed by six local business groups on Thursday, Ministry of Finance estimates showed yesterday.
"We will strike a balance between the nation's income tax regime, fairness and [the taxation system's] efficiency to come up with new tax cut measures in January," Vice Finance Minister Chang Sheng-ford (張盛和) told reporters yesterday, adding that the ministry would take public opinion into consideration.
Six local business groups, including the Chinese National Federation of Industries (CNFI, 工總), the General Chamber of Commerce (GCC, 商總) and the Taiwan Electrical and Electronics Manufacturers' Association (TEEMA, 電電公會), are expected to urge the government to implement tax cuts at their gathering scheduled for Thursday.
Endorsed by two former finance ministers, Lin Chuan (林全) and Yen Ching-chang (顏慶章), the proposals include a 10 percent to 20 percent cut to the 40 percent maximum rate for individual income tax and a 7.5 percent cut in the 25 percent maximum rate for business income tax, as well as the end of the additional 10 percent tax on undistributed earnings.
"If we can't cut income tax to zero in one go as Singapore did, we can at least cut it to a 20 percent top rate," CNFI chairman Chen Wu-hsiung (陳武雄) told reporters yesterday.
The government should speed up tax reforms in order to beef up the nation's international competitiveness, he said.
The proposals on individual and business income tax would cost the government NT$200 billion and NT$105 billion respectively, out of a total NT$1.6 trillion in annual tax revenues, the ministry's estimates showed.
TEEMA executive director Luo Huai-jia (羅懷家) said local companies had difficulty attracting top-tier international talents as the nation's tax environment cannot compete with those in China, Hong Kong and South Korea.
"Top-tier talents are scared away by Taiwan's 40 percent top rate," he said.
The business groups' tax-cut proposals would also benefit low-income earners, he said, since the existing five income tax bands would all have to be adjusted.
In order to increase the competitiveness of the nation's workforce, further cuts in income tax rates would be inevitable, he said.
The Tax Reform Alliance, led by former DPP legislator Chien Hsi-chieh, yesterday lambasted the business groups' proposals, which he called "unfair."
Chien called on Finance Minister Ho Chih-chin (何志欽) to "have the guts" to flatly reject what he described as a "greedy" move.