Sat, Apr 27, 2002 - Page 3 News List

Cabinet set to abolish tax perks

SPECIAL STATUS Teachers and military personnel may soon see an end to their income-tax exemptions thanks to government efforts aimed at improving fairness

By Crystal Hsu  /  STAFF REPORTER

With government expenditures rising and tax revenues sliding, Premier Yu Shyi-kun said yesterday the Cabinet is moving to abolish income-tax exemptions for public school teachers and military personnel.

Lawmakers from across party lines expressed approval for the planned tax reform but recommended an incremental approach to carry it out.

"All citizens are equal before law," the premier said in response to a question from DPP lawmaker Chen Mao-nan (陳茂男). "It is reasonable to expand the tax base so as to make the taxation system fairer. We don't find such exemptions in other countries."

Yu hesitated to set a timetable but added he hoped the suggested reform can be reflected in the government's fiscal plan for next year.

To achieve that, the legislature must amend related tax codes before the end of this year. The premier said that the ministries of education and defense are studying the issue.

"I hope related agencies can soon arrive at a conclusion and put it in the budget plan for next year," Yu said.

The proposed tax reform has been talked about for more than a decade but has run aground due to strong protest from the demographic group and its lobbyists. The tax exemptions have been counted as part of their wages when they take their jobs.

With the economy in the doldrums, leaders from the four legislative caucuses all gave their conditional support for the tax-reform plan.

KMT legislative whip Lin Yi-shih (林益世) said his party is not opposed to the measure but suggested a cautious approach.

"It is better for the government to examine whether the need for such exemptions still exists before taking any action," Lin said.

"Otherwise, the country may suffer if the tax reform deals a heavy blow to the morale of public school teachers and soldiers," Lin added.

To avoid that, he proposed removing the tax exemptions in phases to cushion its impact on the groups.

PFP legislative leader Chin Huei-chu (秦慧珠) agreed in part. She said it is fair to ask all citizens to pay income taxes but noted that military personnel usually work long hours and cannot take holidays off.

"The government is advised to review their salaries and fringe benefits before making them pay income taxes," Chin said.

Echoing a similar theme, TSU lawmaker Chen Cheng-lung (程振隆) said it makes sense to tax teachers and soldiers but urged the Cabinet to bring their salaries up to the level of private-sector employees.

DPP lawmaker Wang Tuoh (王拓) said the caucus will endorse the Cabinet proposal when it is officially introduced.

"Nowadays soldiers and public school teachers make more money than private-sector workers do. The former enjoy summer and winter vacations that are not available to private-sector employees," Wang said.

The premier said he would not rule out a pay hike for public school teachers and soldiers, if it is deemed necessary.

Chen, the DPP lawmaker, went a step further and urged Yu to slash savings interest rates for retired public servants.

Chen noted that the group enjoys a preferential rate of 18 percent, whereas the average rate for the general public hovers around 2 percent.

The premier said that government employees who retire after July 1995 no longer enjoy these high interest rates.

But he refused to adjust already agreed-on interest rates, saying that public servants lived on low incomes before 1995 .

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