The legislature’s finance committee yesterday resolved to defer a draft bill eliminating tax exemptions for military personnel and teachers at the junior high school level and below to the next legislative session amid concerns over a lack of complementary measures.
The proposed amendments to reinstate income taxes for military personnel and teachers would affect about 360,000 people and add nearly NT$16 billion (US$502.1 million) to national coffers, which the Ministry of Finance said would be used to compensate for losses caused by the taxes.
Military personnel in active service and teachers at the kindergarten, elementary and junior high level have been exempted from paying income tax for decades, Minister of Finance Lee Sush-der (李述德) told the committee yesterday.
CHANGING TIMES
As the country modernizes, however, it is generally accepted that these exemptions run counter to the principle of fair taxation and thus should be eliminated, Lee said, adding that the just-disbanded tax reform committee also backed the suggestion.
“This [tax] reform will reasonably ensure the rights of the 360,000 people and at the same time prevent them from being accused of failing to pay taxes,” he said.
Lee said that reinstating income tax for military personnel and teachers was a necessity, but that there must be complementary measures, such as salary increases.
USES
The overall tax revenue will not increase because all the additional taxes will be spent on military personnel and teachers, including raising salaries and improving the teaching environment.
The ministry expects the bill to pass its third legislative reading this year before the amendments take effect next year, meaning that military personnel and teachers would have to file income tax returns in May 2012.
FUND
Lee also said the government would continue using the National Stabilization Fund (NSF) to help stabilize the nation’s stock market.
However, he did not say if the fund would dispose of its local stock holdings — taking a profit from a recent surge on the main bourse — the market has speculated.
Lee said the NSF would make appropriate moves at an appropriate time, adding that any decisions would not be made before the fund’s steering committee meeting, which is scheduled for Jan. 15.
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