Sun, Apr 11, 2010 - Page 3 News List

Wu supports cuts to business tax rate

By Shih Hsiu-chuan  /  STAFF REPORTER

Premier Wu Den-yih (吳敦義) yesterday expressed support for further cuts to the business income tax rate, a comment expected to help garner consensus among lawmakers across party lines to enact the draft on the promotion of innovative industries (產業創新條例).

When approached by reporters yesterday for comment on the draft, Wu said that despite a possible reduction in tax revenue, the cut would enhance the ­attractiveness of the country to foreign capital, speed up investment and create more jobs, thus increasing eventual tax revenues.

Without giving much detail, Wu cited the slash in estate and gift tax rate from 50 percent to 10 percent as an example of tax cuts working to help the government, saying that it brought more benefits than losses in tax revenue.

While the government initially wanted to keep the rate at 20 percent, the tax cut proposal, ­presented by Democratic Progressive Party (DPP) lawmakers, suggested cutting the business income tax rate to 17.5 percent. The proposal has since become one of the causes of deadlock over the draft in the legislature.

While Minister of Finance Lee Sush-der (李述德) had previously said the DPP caucus’ proposal would result in a loss of NT$40.3 billion (US$1.2 billion) in annual tax revenue, the government has nevertheless indicated a change in its position, with Executive Yuan Secretary-General Lin Join-sane (林中森) proposing the possibility of lowering the rate to 17 percent.

Chinese Nationalist Party Legislative caucus whip Lin Yi-shih (林益世) said yesterday the party caucus would concretize its position after making a comparison of the costs and benefits of setting the tax rate at 20 percent, 18 percent and 17 percent.

Last year, the business income tax rate was lowered from 25 percent to 20 percent, leading to an approximate loss of NT$80.8 billion in tax revenues.

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