The Executive Yuan yesterday passed a set of legislative amendments canceling tax exemptions for people serving in the military as well as elementary and high school faculty and staff members. At the same time, however, the Executive Yuan also agreed to demands from the Ministry of National Defense and Ministry of Education asking for "salary subsidies" for service members and education-sector workers. The defense ministry wants salary hikes worth an annual NT$5 billion, while the education ministry is seeking an additional NT$10 billion in its budget. Canceling the tax exemptions will increase the government's tax revenues by NT$13 billion, according to estimates by the Ministry of Finance. Approving the ministries' subsidy requests would cost NT$15 billion. Doesn't sound like a good deal for the Executive Yuan.
The tax exemptions for service members and education-sector workers have been in place for several decades. They used to be seen as political tools, but recent changes in Taiwan's political environment have made it impossible to control and use service members and teachers as election pawns. Public awareness of fair taxation is also rising. Public opinion polls have consistently shown more than 80 percent of respondents support ending these exemptions, even a majority of service people and teachers.
But cancelling the exemptions should not be linked to the two ministries' requests for subsidies. Service people and education-sector workers already enjoy higher salaries than most civil servants. The erstwhile reasons for tax exemptions -- low salaries -- no longer exists. According to Central Personnel Administration statistics, the monthly salary of a lieutenant general in the army is NT$3,000 more than an equivalent "Level 13" official in the civil service. Elementary and high school teachers who have taught for 15 years or more get NT$5,000 more per month than other civil servants with the same length of service.
Government finances are in dire straits, with accumulated debts of more than NT$3 trillion. The government's debt load continues to increase each year. The Executive Yuan should not rush to let go of any opportunity to increase tax revenues.
The Cabinet is now asking its agencies not to increase spending unless they can come up with a comparable increase in income. And yet it appears willing to give up the additional tax revenues it would gain from eliminating the exemptions.
Teachers' and servicemembers' organizations are asking for increases in specific areas of their salary structures. The military is asking for more risk compensation and extra pay for being assigned to offshore islands. The education sector wants more extra pay for counseling and guidance work. While adjustments may be needed in some areas, such changes should be determined by the Central Personnel Administration, not linked to tax issues.
The tax exemptions for service people and education-sector workers have long been a headache for the government. The government is facing a situation and conditions that are very different from the past. It should decisively cancel unfair tax exemptions or incentives and delink salary hikes and subsidies from such cancelations.
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