The Tax Reform Committee yesterday gave the cold shoulder to a suggestion by its deputy convenor that earned income tax credits be introduced to ease the financial burden of the working poor.
The majority suggested instead that existing social welfare programs be strengthened.
Tseng Chu-wei (曾巨威), deputy convener of the task force and a public finance professor at National Chengchi University, proposed that the working poor be eligible for tax refunds or financial aid as part of efforts to bridge gaps in income.
Such a tax credit, also known as a negative income levy, is in place in at least 14 countries.
Huang Yao-huei (黃耀輝), an associate researcher with the Chung-Hwa Institution for Economic Research (中經院), said unemployment subsidies and other relief programs for the poor would be more suitable.
Huang said it would take a long time for the working poor to redeem earned income tax credits and that the underground economy and a lack of comprehensive taxation data would complicate the matter.
The most urgent task was to bring down unemployment, which is expected to escalate in the summer, he said.
Minister of Finance Lee Sush-der (李述德), who presided over the committee meeting, agreed that more research was necessary to determine whether earned income tax credits are practical or desirable.
A year ago, the government established the Tax Reform Committee to make the tax system more conducive to economic growth and to improve the distribution of wealth.
The tax reform committee has thus far scrapped income tax breaks for military personnel and schoolteachers, lowered the corporate income tax rate from 25 percent to 20 percent and slashed the inheritance tax to a flat 10 percent.
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