Thu, Aug 22, 2002 page3

• Plan to kill tax exemption gets mixed review

  • By Crystal Hsu / STAFF REPORTER
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  The planned restoration of the income tax for military service members and elementary and junior high school teachers yesterday drew mixed reviews from lawmakers who have the final say on the matter.

  Some promised support for the measure to make the nation's tax system fairer, while others urged a cautious approach to avoid a potential backlash from groups hurt by the measure.

  DPP Legislator Luo Wen-jia (羅文嘉) said the proposal tax reform is desirable, as social conditions no longer warrant such sweeping tax exemptions.

  The KMT government introduced the income tax break 47 years ago to persuade people to enter the military services and become schoolteachers in spite of the lower wages such jobs traditionally recieve enjoy.

  "Over the years, the situation has been reversed," Luo said. "Nowadays, many vie to join the two sectors, where jobs are widely considered well-paid and stable."

  Earlier in the day, the Cabinet unveiled a policy initiative calling for scrapping the longstanding income tax breaks for military personnel and schoolteachers from the junior high school level down to the kindergarten level.

  DPP Legislator Wang Shu-hui (王淑慧) painted the proposal as long overdue, bringing the two groups' rights and obligations as citizens into agreement.

  According to Wang, most teachers acknowledge the necessity and importance of the income tax reform, which, she added, if carried out properly, would not draw drastic protests.

  Finance officials expect the measure to generate NT$13.3 billion for the state coffers each year. Premier Yu Shyi-kun has promised to use the bulk of the additional revenue to improve the welfare of the two groups, which numbered over 300,000.

  Though supportive of fairer tax codes, the two opposition legislative caucuses expressed reservations about the bill.

  KMT legislative leader Lee Chuan-chia (李全教) said he suspected that by axing the tax exemptions, the government is seeking to help narrow its budgetary shortfall rather than overhaul the tax system.

  Lee said he backed tax reforms in principle but warned policymakers to take long-term economic factors into consideration when handling the issue.

  "What happens if the economy experiences a boom and the work force again swarms to the private sector?" he asked. "The government had better tell us how it intends to address the situation to ensure policy consistency."

  Chiang Yi-wen (江綺雯), another KMT legislator, rejected the legislation out of hand, arguing that its adoption would deal a blow to the morale of low-ranking military officers whose average income remains paltry.

  Though the Cabinet has said it will mull supporting measures to make up for their losses, Chiang said the compensations may prove to be insufficient and only temporary in nature.

  She vowed to boycott the policy change unless the government comes up with satisfactory pay raises for the two groups.

  PFP legislative leader Lee Hung-chun (李鴻均) echoed Chiang's concern and said it is more urgent for the government to revive the economy in an attempt to boost its revenues.

  He declined further comment on the draft legislation before seeing it.

  The Cabinet is expected to submit the bill over to the legislature for review in October. If all goes smoothly, the tax exemptions will be abolished as early as January 2003.
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