Sat, Jan 08, 2011 - Page 1 News List

Teachers, military lose decades-old tax privilege

END OF AN ERA:Military personnel and some teachers will need to start paying taxes in 2013 after an exemption in place since the mid-1950s was abolished yesterday

By Shih Hsiu-chuan  /  Staff Reporter

The Legislative Yuan yesterday passed an amendment to the Income Tax Act (所得稅法) abolishing the much-criticized income-tax immunity enjoyed by military personnel and some categories of teachers.

The immunity has long been criticized as a symbol of the unfairness of the taxation system.

According to the amendment, military personnel and teachers at junior high and elementary schools, kindergartens and daycare centers will see their salaries become taxable from 2012, meaning that they will have to start filing taxes in 2013.

The Ministry of Finance said that the amendment will affect 370,000 people — 135,000 servicemen, 207,000 teachers and 29,000 caregivers providing children with early education — and provide the -government with extra tax revenues of about NT$1 billion (US$374.5 million) annually.

“Reinstating the income tax will meet the public’s expectation of fairness in the taxation system, while supplementary measures will be in place before implementation of the amendment,” Minister of Finance Lee Sush-der (李述德) told a press conference.

The government has agreed that the tax revenue collected from tax-paying servicemen and teachers will be used to grant subsidies or allowances aimed at ensuring that their actual incomes remain unchanged and to improve their working environments.

Vice Minister of Education Lin Tsong-ming (林聰明) said his ministry has put forward a set of supplementary measures to subsidize elementary schools to hire more administrative and consulting staffers to reduce the burden on teachers, to reduce the weekly teaching hours of staff in elementary and junior high schools and to increase tuition fees, among other measures.

Vice Minister of National Defense Lin Yu-pao (林於豹) said his ministry would propose providing low-ranking servicemen with extra wages for duty-related activities, but added that the extra benefits would not be applied to high-ranking generals.

The government granted income tax exemption privileges to military personnel and teachers in public elementary and junior high schools in 1955 when their salaries were relatively low compared with the private sector. The privilege was extended to teachers in private elementary and junior high schools in 1979.

There have been calls to discontinue the tax exemption since the 1990s, but previous proposals to end the practice were put off by many legislative sessions over the past 20 years because of vested interests and election considerations.

ADDITIONAL REPORTING BY CNA

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