The legislature’s Finance Committee yesterday approved a proposal to raise gift and inheritance taxes from 10 percent to a progressive range of rates, but would allow cross-party talks to set the new rates.
Negotiations could take place for up to a month before the legislature schedules final readings to reverse a drastic tax cut made in 2009 to spur capital repatriations and boost the economy.
Lawmakers from across party lines lent support to the tax increases, which would be used to fund a long-term care services program for the nation’s aging population and improve social justice.
Photo: Taipei Times
“The Democratic Progressive Party has enough votes to push the tax revisions through if the parties remain divided over the rates,” DPP Legislator Wang Jung-chang (王榮璋) said by telephone.
The Cabinet has suggested raising the tax rates to a range between 15 percent and 20 percent, while the New Power Party (NPP) favors bolder increases up to 30 percent to make the distribution of wealth more equitable.
“Whatever the final results, it will be better than the ‘status quo,’” said Wang, who presided over the committee meeting.
The bill is set to clear the legislature this session and go into effect later this year, he said.
Minister of Finance Sheu Yu-jer (許虞哲) voiced concern that steep increases would encourage tax evasion and capital outflows, and that state coffers could suffer.
“It is better to introduce tax increases in a modest fashion, allowing asset-rich people a reason to stay put and pay their taxes,” Sheu told the committee.
The tax cut eight years ago did increase capital repatriations, but they failed to flow into the desired areas, he said.
The government’s tax revisions would affect only 1,500 people, as the tax rate on net inheritances of less than NT$50 million (US$1.62 million) would remain at 10 percent, Sheu said.
The bill proposes that the tax rate would rise to 15 percent for inheritances between NT$50 million and NT$100 million, and 20 percent on more than NT$100 million.
The gift tax would increase to 15 percent for values between NT$25 million and NT$50 million, and to 20 percent for gifts worth more than NT$50 million.
The tax increases are expected to generate an extra NT$6.3 billion in revenue a year after factoring in tax-saving plans and the money would go directly to the long-term care program, Sheu said.
NPP Executive Chairman Huang Kuo-chang (黃國昌) said the government’s bill is overly lenient and fails to address the widening gap between the rich and poor.
His party introduced its own bill with a cap of 30 percent on both inheritance and gift taxes.
The NPP bill also calls for stricter limits by using the 30 percent rate on net inheritances worth more than NT$28 million, the 15 percent rate on those between NT$13 million and NT$28 million and the 10 percent rate for those of less than NT$13 million.
“Tax reform can both finance the long-term care program and promote social fairness if the government is willing,” Huang said.
The NPP bill seeks to impose a 30 percent gift tax on gifts worth more than NT$3.5 million, a 20 percent tax on values between NT$1.5 million and NT$3.5 million, and a 10 percent levy on gifts of less than NT$1.5 million.
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