Naming long-term care services for the elderly as a top priority of her government, president-elect Tsai Ing-wen (蔡英文) said that the program would be funded mainly by income from gift and inheritance taxes, which she wants to increase slightly.
Asked about public fears over a sharp hike in the tax rate, which is as low as 10 percent for some taxpayers and has been criticized as “benefiting rich people,” Tsai said in an interview published yesterday by the Chinese-language China Times that “we will not let gift and inheritance taxes climb too steeply.”
According to the long-term care policy mapped out by Tsai and the Democratic Progressive Party (DPP), the program for the elderly would be funded by tax revenue with a budget of between NT$30 billion and NT$40 billion (US$921.8 million and US$1.23 billion) a year.
Some taxes, including gift, inheritance and property taxes, would be designated to provide the funding.
To increase revenue, the gift and inheritance tax rates would be raised to 20 percent in the initial stage, according to Tsai’s plan.
While the business sector has expressed concern that the sales tax would be increased to finance Tsai’s long-term care policy, she told the newspaper that she has not considered increasing it.
A moderate hike to gift and inheritance taxes and the allocation of government budget “should be sufficient in the early stages,” Tsai said.
Tsai’s planned long-term care system was criticized by the Chinese Nationalist Party (KMT) before the presidential election on Jan. 16, as it had already promoted its own version.
President Ma Ying-jeou’s (馬英九) government has proposed integrating long-term care services with the National Health Insurance system.
By increasing the insurance premium rate by 1 percent, the government would have an additional income of more than NT$100 billion a year to fund the new services, the Ma administration said.
Tsai said that in the initial stage of the implementation of long-term care services, only NT$30 billion of funding would be needed each year, but that the KMT’s plan would require funding of more than NT$100 billion, which she said would lead to a surplus and problems waiting to happen.
A long-term care insurance program as planned by the KMT could also cause long-term care services to become so commercialized that many people would not be able to afford them, Tsai said.
Furthermore, the KMT’s NT$100 billion-worth of funding would be made up of NT$40 billion from the government, NT$30 billion from employers and NT$30 billion from employees.
“The burden will be heavier if a long-term care tax is added to workers,” Tsai said.
Since the government has already planned to allocate between NT$30 billion and NT$40 billion for long-term care services, this should be used to cover expenditures in the initial stage, Tsai said.
The government can wait until a complete long-term care services system is established before beginning its planning of a second-stage financial source, she said.
“This will cause the lightest burden and build the groundwork for long-term care services,” she said.
The gift and inheritance tax was lowered from 50 percent to 10 percent in 2008 by the Ma administration to help persuade wealthy Taiwanese to bring their money back to Taiwan for investment.
The move has caused controversy because much of the capital inflow ended up in the housing market instead of in industry.
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