Minister of Finance Lee Sush-der (李述德) said yesterday his ministry favored lowering the ceiling for inheritance and gift taxes to 10 perceAnt from 50 percent to spur economic growth.
Lee made the statement at a meeting of the legislature’s Finance Committee, which was reviewing the ministry’s budget for next year.
“The ministry is inclined to back the proposal to cap the levy at 10 percent,” Lee said when Chinese Nationalist Party (KMT) Legislator Liao Cheng-ching (廖正井) asked for his stance on the matter.
“The adjustment is more reasonable ... The Cabinet will have the final say on the matter,” Lee said.
A day earlier, the Tax Reform Committee proposed five options: capping the tax at 10 percent, 20 percent, 25 percent or 30 percent or leaving it untouched at 50 percent.
Lee said a cap of 10 percent would cost the national treasury some NT$20 billion (US$617 million) a year, but higher rates would fail to bring overseas Taiwanese capital back to Taiwan.
“The finance ministry considers it better to lower the tax to 10 percent to promote economic growth and social fairness,” Lee told lawmakers.
The inheritance and gift taxes stand at between 2 percent and 50 percent depending on the amount inherited or given.
Some argue that the tax cut is necessary to turn Taiwan into a regional financial center, because Hong Kong and Singapore have both scrapped the levy.
Lee said the ministry also intended to propose raising the tax exemption threshold for gifts and inheritance to NT$12 million from NT$7.79 million.
In addition, the minister said the government was working to lower personal income taxes, with funds to be drawn instead from high-tech companies, which will have to pay more taxes after the Statute for Upgrading Industries (促進產業升級條例) expires next year.
Up to 5 million households are expected to benefit from the income tax cut that still needs approval from the Cabinet and the legislature.
Democratic Progressive Party (DPP) Legislator Huang Wei-cher (黃偉哲) said the idea of cutting income tax was a red herring to divert the public’s attention from the dispute over the inheritance levy.
Huang said he and other DPP colleagues would not accept cutting the inheritance and gift taxes to 10 percent and would boycott the proposal in the legislature.
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