Fri, Jun 03, 2005 - Page 3 News List

President Chen Shui-bian defends tax reform

By Huang Tai-lin  /  STAFF REPORTER

The tax reform proposals are not an across-the-board tax hike, as some media reports and opposition politicians have claimed, President Chen Shui-bian (陳水扁) said yesterday, adding that the reform plan was aimed at establishing a more equitable taxation system in keeping with the principles of social justice.

Noting that many of the Democratic Progressive Party's (DPP) supporters are low-income people, Chen said "the DPP grew to be what it is today by standing on the side of the weak and underprivileged and caring for them."

"Not only will this tax reform not add to the burden of the underprivileged, it will on the other hand work so that the rich can pay more [taxes]," Chen added.

The president made the remarks yesterday afternoon during a tea gathering with DPP legislators. This was the third consecutive meeting of its kind at the Taipei Guest House.

During the gathering, which primarily focused on the topic of tax-reform, Chen defended the tax reform proposals which his Economic Advisory Panel recently unveiled.

The panel on Monday proposed raising the average national tax rate from the current 13.6 percent to 15 percent over three years, and eventually to 18 percent.

Other proposals include a hike on the value-added tax of two to one percentage points from the current 5 percent, the imposition of a minimum tax scheme and trimming the inheritance and gift taxes 50 percent to 40 percent.

It was apparent that yesterday's event also provided a venue for the president to address critics who panned the proposals as robbing the poor and giving to the rich.

Addressing criticism against the proposal to raise the average national tax rate, Chen said Taiwan's average national tax rate is relatively low in comparison to that of other countries, noting that the average national taxation rate for countries that are members of the Organization for Economic Cooperation and Development (OECD) is about 27 percent.

With regard to the opposition's criticism that the plan to lower the inheritance and gift tax is inconsistent with the principles of justice and fairness, the president, noting that people who are determined to evade taxes often do so by placing their assets overseas, said that lowering the inheritance and gift taxes would at least allow the government a greater chance to tax these groups.

Chen said the tax reform proposals are aimed at achieving fiscal balance, adding that the plans were in line with the conclusions reached by the Economic Development Advisory Conference in 2001, which set a goal of balancing the budget in five to 10 years.

Acknowledging that concern lingered among some DPP legislators, who worry that pushing the reforms would end up costing the DPP votes during upcoming elections, Chen stressed that "reform is the DPP's No. 1 shining trade mark," and that the party must not let itself be tied to such fears.

"Such concerns are normal," Chen said. "But the DPP prides itself as a reformist political party, and cannot shun undertaking reforms just because it fears it might lose votes."

Chen then called on party members not to be misled by distorted media reports and comments from the opposition parties, but to acquire a complete understanding of the matter themselves and help the government promote these reforms.

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