As part of the latest Cabinet reshuffle, Su Jain-rong (蘇建榮) is today to replace Sheu Yu-jer (許虞哲) as minister of finance. Su has served as deputy minister of finance for the past two years, so his appointment comes as no surprise.
Su served as Taipei Department of Finance commissioner from 2014 to 2016 and, before that, was a professor of public finance at National Taipei University, conducting research on finance, customs, taxation and national policy.
Su is a proven public official who has shown how to reduce bureaucratic waste and enhance communication with the media in local and central government posts. As deputy finance minister, he has honed the ability to manage the national treasury and oversee state-owned banks.
His appointment as finance minister might reflect the Democratic Progressive Party (DPP) administration’s plan to cultivate its own high-caliber finance and economics talent.
Nevertheless, in taking the helm, Su is bound to run into the same challenges as his predecessor: the need to make further modifications to the Income Tax Act (所得稅法), to create a fairer taxation environment and a more even distribution of wealth, and to amend the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法) to ensure fair allocation of resources to local governments.
The first set of amendments to the Income Tax Act, which cleared the legislative floor in January under Sheu, increases various tax deductions for wage-earners, low and middle-income earners and disabled people, as well as easing the tax burden on small businesses and innovative start-ups.
However, after taking the oath today, Su will be under pressure to launch a set of amendments modifying the way itemized deductions are calculated, because an interpretation rendered by the Council of Grand Justices on Feb. 8 last year found the law governing the calculation of income from salaries to be unconstitutional.
The act as it stands requires taxpayers to adopt a lump-sum deduction method, not an itemized deduction, when reporting expenditure.
However, the Grand Justices’ Interpretation No. 745 stipulates that this regulation constitutes discrimination between income from salaries and that from professional practice, violating the principle of equality enshrined in Article 7 of the Constitution.
The authorities are required to amend the Income Tax Act within two years, or by Feb. 9 next year.
Lawmakers have recommended increasing tax deductions for long-term care as part of the second set of amendments, and adding deductions for annuity insurance and long-term care insurance, among other items, so Su would need seasoned, competent deputies and subordinates to assist him in communicating and negotiating with majority-party and opposition lawmakers.
The revision of the Act Governing the Allocation of Government Revenues and Expenditures will pose another challenge for Su, as the DPP government has promised to revise the law as soon as possible so that the financial health of local governments can be improved.
However, proposed amendments to the act have not cleared the Legislative Yuan since being tabled nearly 15 years ago, as no consensus has ever been reached between ruling-party and opposition lawmakers, or between the executive and legislative branches.
If Su wants to complete this long-delayed task, he must formulate a persuasive argument and a more viable strategy than his predecessors.
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