Thu, Feb 17, 2005 - Page 1 News List

Soldiers, teachers to lose tax-exempt status if bill passes

By Ko Shu-ling  /  STAFF REPORTER

Soldiers and teachers could have to pay income taxes for the first time in 50 years, as the Executive Yuan approved draft amendments to the Income Tax Law (所得稅法) yesterday.

The draft will proceed to the Legislative Yuan for further review and final approval. Service members and teachers in schools up to the level of junior high have been exempted from paying income tax since 1955. When the law was enacted 50 years ago, the government offered the incentives to encourage people to teach or join the military.

As soldiers and teachers have now become better off than some of their counterparts in the private sector, and are no longer classified as low-income groups, people have been calling for the cancelation of such privileges over the past 10 or 20 years.

The Cabinet had originally hoped to see the draft pass the legislature in 2002, so the changes could go into effect in January 2003. While it failed to win support, the Cabinet resent the draft to the new legislature, which convenes Friday next week.

It is estimated that the change would affect about 100,000 soldiers and 200,000 teachers and bring in about NT$13 billion annually to state coffers. The catch, however, is that the Cabinet might increase the salaries of these people in a bid to compensate them for their financial losses.

The government has planned to use the annual government salary increase to boost teachers' and soldiers' salaries, in addition to improving school facilities.

The draft also authorized the Executive Yuan to decide when to implement the amended law. Lawmakers from across party lines yesterday welcomed the Executive Yuan's decision, but stressed the importance of mapping out supplementary measures to prevent a backlash.

DPP caucus whip Lai Ching-te (賴清德) said that it has been his party's long-term goal to push for the abolition of the soldiers' and teachers' tax privilege.

"While such a prerogative has its own historic reasons, we're happy to see the Executive Yuan take the initiative, as soldiers and teachers are making more money than other professionals," he said yesterday. "Apart from making the tax system more fair, we hope the Cabinet can map out a well-thought-out plan to make the law more complete."

Taiwan Solidarity Union (TSU) caucus whip Lo Chih-ming (羅志明) said yesterday that his caucus would not oppose the draft, but urged the government to ponder how to use the money to adjust teachers' and soldiers' salaries and improve school facilities. Lo also called on the Executive Yuan to explain the draft to people concerned and negotiate with the legislature since Premier Frank Hsieh (謝長廷) has been boasting of his government as a "negotiating Cabinet."

Despite the TSU's support, Lo said that the Democratic Progressive Party (DPP) is obliged to explain to both the public and the legislature why it wanted to push the passage of the draft again now.

PFP caucus whip Liu Wen-hsiung (劉文雄) said yesterday that his caucus supported fair taxation, but called on the government to come up with supplementary plans to make up for the financial losses of soldiers and teachers.

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