Tue, Jan 10, 2006 - Page 1 News List

Bill removing tax breaks for teachers, soldiers advances


The controversial abolition of tax-exempt status for military personnel and public schoolteachers passed the first reading in a joint session of the finance, education and defense committees of the Legislative Yuan yesterday.

With both political camps reaching a general consensus on the issue, the reading passed without incident, the United Evening News reported yesterday.

The amendments to the Tax Law (所得稅法), which will affect more than 300,000 people, will abolish the tax-free status of military personnel and public schoolteachers from Jan. 1, 2007. They will have to submit tax returns in the standard way in 2008.

It is estimated that the new tax revenue from military personnel will amount to NT$5.7 billion (US$178 million) and from teachers NT$9.8 billion, for a total of NT$15.5 billion. Based on a resolution agreed to during yesterday's meeting, the revenue obtained from the tax on military personnel will subsidize salaries for career officers and soldiers, while the revenue from the tax on teachers will be channeled directly into the education system.

In the case of teachers, this will include additional funds for the hiring of auxiliary personnel in schools, increasing subsidies for teachers performing additional duties, the creation of a fund rewarding outstanding teachers and a reduction of teaching hours -- two periods for each high school teacher and three periods for elementary school teachers.

The National Teachers' Association said it was dissatisfied with the arrangement but would respect it. A spokesman for the association said the government was using the money of teachers to subsidize investment in the education system, which it should have made from consolidated revenue.

The military had long agreed to the taxing of incomes in principle on condition that all revenue would be used to subsidize salaries and that the take-home income of personnel would not be compromised.

The Ministry of National Defense said the take-home pay for lieutenant colonels and ranks below would not be affected, while major generals and ranks above might lose as much as NT$10,000 a month.

Minister of Finance Lin Chuan (林全) said that he was happy with the agreement, which created a win-win situation in which the principle of taxation for all would be honored, while those affected by the abolition of the tax-exempt status would not suffer any drastic reduction in pay.

He said that the lifting of the special status for teachers and military personnel had never been about increasing tax revenue, but about redressing an inequality in which certain professions had special treatment.

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