The amendment I have proposed to Article 17 of the Income Tax Law (所得稅法) would allow taxpayers and their spouses to claim deductions on their junior college or university tuition fees. This was attacked as a tactic to please voters through tax-cutting measures. I feel that I should raise a few arguments in defense of this proposal. This amendment originated with a student who was simultaneously working and attending evening school. He said that because he earned a salary, he needed to make an individual income tax filing. However, as per tax regulations, he would not be able to claim his tuition fees as a special deduction.
Last year the Ministry of Finance looked into an amendment that sought to increase the deduction that parents could claim for their children’s tuition costs. However, this amendment failed to include tuition fees that taxpayers incurred themselves.
Not just evening school students, but quite a few postgraduate students also face the same problem. Most of them have not yet married or had children, but are working while going to school and are financially independent. However, not only do they pay their tuition, but they are also unable to deduct it from their income tax filing. Moreover, since they earn an income, they cannot be considered dependents of their parents and so their parents cannot claim their tuition as deductions either. Conversely, if the students do not work and are living with their parents, their tuition fees would then be eligible as a deduction.
These diligent work/study students may not earn high salaries and some come from financially shaky family backgrounds, but they are unable to receive any compensation. On the other hand, students who are supported by their parents usually enjoy a more stable financial situation at home, yet they are eligible for tuition reimbursement from the government. This kind of policy will only end up benefiting the rich.
The current reimbursement system actually provides a disincentive for people to invest in themselves. The Ministry of Finance encourages the public to invest in stocks and offshore mutual funds, but discourages them from improving themselves through further studies. This really is a strange state of affairs.
If the personal tuition costs of taxpayers could be claimed as deductions, not only would that provide economic relief to quite a few postgraduate and evening-school students, many of those taking professional training courses would also benefit. These students have gone back to school to improve their skills. This is what self-investment is all about. This also improves the nation’s global competitiveness.
As the government always talks about encouraging people to engage in continuous education, shouldn’t it provide help for that through tax exemption policy?
I had previously queried the ministry on these two issues, but it did not provide any clear response. In private I heard that this was because of its worries over the tax base shrinking. Actually, not that many people are both students and taxpayers, so this amendment would not affect the tax base very much. The ministry’s opposition is most likely merely the result of the attachment that government organizations have for the old, fossilized system.
Since the ministry is unwilling to research this matter itself, it is my duty as a legislator to take the lead in amending the Income Tax Law so that the government’s goodwill is applied to those who truly need the reimbursements and that the government’s encouragement of citizens to invest in themselves are not just empty words.
Chen Chi-yu is a Democratic Progressive Party legislator.
TRANSLATED BY JAMES CHEN
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