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Tax committee to scrap exemptions

The Tax Reform Committee reached a consensus yesterday to scrap the 30-year-old income tax exemption for military personnel as well as primary and junior high school teachers, starting next year.

Minister of Finance Lee Sush-der (李述德), who presided over the reform consultation yesterday, said committee members all agreed the two groups should pay income taxes just as other citizens do, in line with the principle of fairness, though some remained divided about the details of supporting measures.

“The government is serious about the reform,” Lee told a media briefing at the ministry. “It can be put into practice as early as next year if the legislature gives its go-ahead in time. Concerned authorities will step down if the reform fails this time.”

The government has long sought to reinstate income tax for military personnel and school teachers who enjoyed relatively comfortable incomes compared with employees from other sectors.

Previous reform efforts had been futile as the groups protested the reform and had the backing of Chinese Nationalist Party (KMT) legislators who controlled a majority in legislature.

The tax reform is expected to affect 320,000 people and generate NT$15.1 billion (US$484 million) a year for state coffers, Lee said, adding that the extra revenues would be used to strengthen military and education welfare benefits.

Huang Shih-hsin (黃世鑫), a tax professor at National Taipei University and member of the reform committee, said in his report that military personnel and schoolteachers could contribute NT$5.73 billion and NT$9.37 billion a year, respectively.

The Ministry of National Defense intends to use the extra money to increase payroll for recruited soldiers, Lee said, adding that the Ministry of Education would spend the additional fund on improving schools.

The education ministry has yet to iron out disagreements with teachers’ groups over compensation measures.

Chien Hsi-chieh, an advocate of fair taxation, said it is not appropriate for any group to tell the government how to spend tax revenues.

Calling the income tax exemption an unfair design, Chien urged teachers to stop boycotting the reform. Chien suggested that teachers should instead pressure the government to increase the annual education budget from the current 3.8 percent of the nation’s GDP to 5 percent or NT$600 billion (US$19.2 billion).

The reform committee is slated to finish discussion on the issue by the end of next month when measures to simplify tax declaration procedures would also be put forth, the finance minister said.

Lee said the committee is working to cut down tax disputes as well as streamline declaration procedures for business, individual and corporate income taxes as part of an attempt to make the taxation system fairer and more favorable for economic growth. The committee is scheduled to meet next week.

Also See: Teachers may support tax if compensation offered
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