The government’s tax reform plan is mainly aimed at boosting tax fairness, formulating sound fiscal policies and improving public financial management, the Ministry of Finance said in a statement on Saturday.
The ministry issued the statement after tax reform activists staged a march through downtown Taipei earlier in the day to protest a ministry-proposed tax reform package that they said would only benefit big business groups and the super rich while generating debt for future generations.
Defending its reform package, which is now under legislative screening, the ministry said the tax burden, at a rate of 14 percent of the government’s overall income, was lower than a majority of advanced countries around the world.
However, many people often complain about the heavy tax burden and unfairness in taxation. Against this backdrop, the ministry said it formed a Tax Reform Committee in June to conduct an overall review of the existing tax system and come up with reform proposals.
Insisting that the reform package has taken into account tax fairness and efficiency, the ministry said the newly proposed business income tax rate would be applied to all industries.
The tax rate adjustment will be implemented in connection with the expiration of tax breaks for selected high-tech industries at the end of next year.
By so doing, the ministry said, all industrial sectors, including various traditional industries, would benefit from lowered business income taxes, encouraging them to invest in restructuring and technology upgrades to enhance their competitiveness.
In the meantime, the ministry said, the reform package also proposes increases of four categories of income tax deductions to benefit all taxpayers.
On the estate tax reform, the ministry said the reform package includes measures to levy special sales taxes on luxury goods and to overhaul existing land and housing taxes with an aim to expand the tax base and maintain tax fairness.
As to the proposal to largely cut the inheritance and gift taxes, a bone of contention, the ministry said reduction in inheritance and gift taxes was a global trend.
After Hong Kong and Singapore canceled such taxes, South Korea also announced a reform plan recently that would lead to a substantial cut of inheritance and gift taxes, the ministry said, adding that its plan to lower the inheritance tax from the current 50 percent to 10 percent was in compliance with the general world trend.