President Ma Ying-jeou (馬英九) yesterday said he fully supported a proposed luxury tax and hoped the legislature would pass the bill in a speedy manner.
Speaking at a news conference, Ma said he hoped the luxury tax could be implemented on July 1.
The purpose of the luxury tax, he said, was to crack down on speculation, not to influence property values, although he added that he hoped the new tax would help housing prices return to normal.
Photo: Wang Min-wei, Taipei Times
“The last thing we want to see is speculators benefit while home owners suffer,” he said. “It is not fair and it is not a phenomenon a reasonable society should tolerate. So we decided to implement the luxury tax, hoping to deter such an unhealthy trend.”
In addition to the luxury tax, Ma said his administration also planned to provide more reasonably priced public housing and low-interest loans to young people wishing to own their own homes.
However, Ma declined to comment on criticism leveled by financial experts that the proposed tax was just a pretense his administration would use to conceal its failure to deliver on a political promise to reform the tax system and that the luxury tax would not rectify inequalities.
Alliance for Fair Tax Reform convener Wang Jung-chang (王榮璋) has said that it is unfair for the nation’s 9 million wage earners to pay 72.34 percent of the nation’s overall taxes, while the money they make only accounts for 44.5 percent of GDP.
To ease the tax burden on wage earners, Taiwan Thinktank has proposed that wealthy people pay more in taxes and that the government tax capital gains accrued by the wealthy. They recommended that the money collected from the wealthy be used for investment in human resources and social welfare.
Instead of responding to a -request by the Taipei Times to comment on the criticisms, Ma asked Minister of Finance Lee Sush-der (李述德) to answer.
Lee dismissed the experts’ criticism that the tax system was prejudicial, saying the taxes the nation’s wealthiest pay are 300 times higher than those of the poorest. For example, taxpayers in the 6 percent income tax bracket pay an average of NT$9,000 in taxes per year, while those in the 40 percent bracket pay about NT$3 million per year.
“No matter how you calculate it, the end result is that those with higher income pay more in taxes,” Lee said. “We can clearly see the fairness of the tax system.”
While experts also said wealthy people were not taxed on capital gains, Lee said wealthy people are in fact taxed on capital gains, but the taxes they pay are just not called capital gains taxes.
Lee said that under the current tax system, there were three different taxes relevant to capital gains that collected more than NT$140 billion (US$4.78 billion) each year.
One of them is the land value increment tax (土地增值稅), through which Lee said the state collected about NT$70 billion last year. -Another is the securities trading tax (證券交易稅), which brings in about NT$100 billion each year, Lee said. Half of that amount is based on capital gains, he said. Finally, the capital gains added to the basic income tax a person must pay nets about NT$20 billion for the state treasury each year, Lee said.
Explaining why the government wanted to enact a new tax law rather than amend an existing one, Lee said the country had three major sources of tax income and 17 different taxes, with each having its own rates and calculation systems.
It would be very “difficult,” “complicated” and “unnecessary” to revise existing laws to meet the special needs of imposing the luxury tax because changing existing laws would “dilute the importance” of the issue, Lee said.
Separately, Lin Yi-shih (林益世), executive director of the Chinese Nationalist Party’s (KMT) Policy Committee, said yesterday that KMT legislators would throw their full support behind the bill drafted by the Executive Yuan.
Lin said he hoped it would not take long for the legislature to pass the bill into law.
He said that if Democratic Progressive Party (DPP) legislators had differing opinions or perspectives on the bill, then the two parties’ legislative caucuses should spend no more than one month debating and negotiating a final resolution.
DPP caucus whip Ker Chien-ming (柯建銘) said the DPP also supported for the bill, but added that the party wanted to ensure the bill clearly states that the proceeds have to be spent on social welfare programs.
“The party caucus insists that the NT$15 billion in expected proceeds from the tax be clearly labeled for use in social programs,” Ker said. “It can’t be used elsewhere.”
According to several DPP lawmakers, the party caucus has already created a task force led by DPP Legislator Hsu Tain-tsair (許添財) to study the tax.
The task force was still studying whether DPP lawmakers should ask for pre-sale housing and houses built on agricultural land to be included in the bill, Ker said.
However, he said the DPP caucus would “abide by the principle of not opposing or blocking this tax.”
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