The Ministry of Finance yesterday unveiled plans to raise the inheritance, gift and tobacco taxes to finance long-term care services for the nation’s aging population.
The ministry plans to raise inheritance and gift taxes from 10 percent to a range of up to 20 percent, and nearly triple tobacco taxes from NT$11.8 (US$0.37) to NT$31.8 per pack, which it estimated would generate about NT$22 billion in annual tax revenue to sponsor the long-term care services program.
The Ministry of Health and Welfare has proposed an annual budget of NT$17.8 billion to set up community-level facilities to assist 738,000 senior citizens who need daily care.
Photo: CNA
“The proposed tax hikes would have a very limited impact on the economy, because only a small number of affluent people would be affected,” Minister of Finance Sheu Yu-jer (許虞哲) told the legislature’s Finance Committee.
Instead of a flat 10 percent, inheritance and gift taxes would be replaced with a three-tier tax system, the ministry said in a report.
While the tax on net inheritances worth less than NT$50 million would remain the same, it would rise to 15 percent for those worth between NT$50 million and NT$100 million, and 20 percent for those valued at more than NT$100 million.
The proposal would also raise the gift tax to 15 percent for those worth between NT$25 million and NT$50 million, and to 20 percent for those valued at more than NT$50 million, the report said.
After factoring in tax-saving plans, the ministry expects the tax increase would affect only 1,610 cases per year, Sheu said.
The minister also downplayed concern that people might move their assets to tax havens overseas, which he said would be costly.
The proposed increases should take effect next year if the legislature gives the go-ahead by the end of this session.
Some lawmakers suggested raising business taxes by 0.5 percentage points to finance the welfare program, but Sheu voiced concern over resistance from the business community given the slow economy at home and abroad.
Other lawmakers said that a steep increase in the tobacco tax might foster a black market for cigarettes and weaken state coffers instead.
The ministry said it would step up its crackdown on illegal tobacco sales, but added that cigarette consumption could drop 20 percent after the tax increase.
The government would welcome a decrease in cigarette consumption, which would be favorable to public health, Sheu said, adding that the planned tobacco tax hike is reasonable.
Currently, taxes and surcharges of tobacco products stand at 48 percent, much lower than the 70 percent level recommended by the WHO, he said.
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