The legislature passed an amendment to the Income Tax Law (
Currently, taxpayers can only deduct a maximum of NT$24,000 in all insurance expenses, including the health insurance premium.
Under the amendment, the cap remains but taxpayers will be able to deduct the full amount of their health insurance premium as a separate item.
The legislature's finance committee urged the Ministry of Finance to resume the five percent finance income tax on financial institutions to make up for the loss in tax revenue when the policy becomes effective.
The ministry estimated tax revenues will decrease by NT$4.5 billion (US$141 million) next year because of the amendment.
The ministry said that the policy will benefit families who enter itemized deductions in their yearly tax reports, which accounts for only 32 percent of all the taxpaying households.
The bill was supported by legislators across party lines. Chinese Nationalist Party (KMT) Legislator Alex Fai (費鴻泰) noted the national health insurance premium is an obligatory payment and that the amount that must be paid is proportional to a person's income.
While Fai wants to see the health insurance system continue, he said people should be compensated by having to pay less tax.
Taiwan Solidarity Union Legislator Lo Chi-ming (羅志明) said that when the law stipulating a NT$24,000 cap for deductions was passed in 1989, it did not take into account an increase in health insurance premiums later.
Lo said that the law was therefore out of date.
The Department of Health has proposed setting health insurance premiums based on the total revenue of each household, including regular income as well as profits from stocks and bonds.
Most people pay their national health insurance premium through a deduction from their monthly paycheck.