Sun, Sep 03, 2017 page3

• Lawmakers recommend adjustments to tax plan

  • By Sean Lin / Staff reporter
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  Lawmakers yesterday weighed in on the Ministry of Finance’s proposed tax adjustments aimed at making the taxation system more comprehensive and equitable.

  The ministry should consider further raising personal income tax “special deductions” from NT$180,000 to NT$200,000 (US$5,969 to US$6,632) to benefit salaried workers, Democratic Progressive Party (DPP) Legislator Wu Ping-jui (吳秉叡) said.

  Under the existing rules, workers are eligible for a deduction of NT$128,000 from their yearly salaries. In cases where taxpayers, their spouses or family members hold disability certificates, a further NT$128,000 deduction applies.

  

  Chinese Nationalist Party (KMT) Legislator William Tseng speaks to the media in Taipei on June 19.

  Photo: Chien Jung-fong, Taipei Times

  Under the proposal, a worker who earns NT$600,000 a year would receive a tax reduction of NT$3,600, a figure that can be increased by further raising special deductions, Wu said.

  The plan’s two major changes are the separation of business and income taxes — meaning that dividend income tax payments would be charged separately — and the increase of corporate income tax from 17 percent to 20 percent to compensate for losses arising from the proposed cuts, he said.

  The two schemes under consideration would reduce the nation’s annual tax revenue by NT$5.9 billion and NT$6.9 billion respectively, which from a broader perspective does not constitute a large-scale reduction, he said.

  Chinese Nationalist Party (KMT) Legislator William Tseng (曾銘宗), a former deputy minister of finance, welcomed the adjustments, but said that deductions could be further increased.

  Besides recommending that special deductions be raised to NT$200,000, Tseng also suggested raising the NT$90,000 “standard deductions” from workers’ yearly salaries to NT$150,000, compared with the ministry’s proposal of NT$110,000.

  He approved of plans to increase corporate income tax rates and reinstate the 40 percent personal income tax, which he said is “more reasonable” than the current 45 percent.

  “The corporate income tax rate is 16.5 percent in Singapore and 17 percent in Hong Kong. Taiwan does not have what it takes to set such a low rate,” Tseng said.

  “After the personal income tax rate was raised to 45 percent, many wealthy people renounced their Republic of China citizenship and moved to Hong Kong or Singapore where we could not tax them, which defeats the purpose,” he said.

  Tseng also called on the ministry to propose rules to tackle the nation’s underground economy, the market value of which is estimated at about 30 percent of GDP.

  If taxed, the black market would add about NT$150 billion to the nation’s annual tax revenue, he said.

  The plan favors investors who earn higher dividends, as well as companies that generate higher income, DPP Legislator Wang Jung-chang (王榮璋) said.

  He suggested further raising the corporate income tax rate to 21 percent, which would provide an additional NT$21 billion in tax revenue, allowing an increase in deductions for the average worker.

  Saying that redistributing tax payments should not cause a reduction in tax revenue, Wang suggested slashing the tax rate on retained earnings from 10 percent to 6 percent, rather than 5 percent as proposed by the ministry.

  This would spare about NT$6 billion, which could be used to offset losses arising from the adjustments, Wang said.

  Although the legislature has not put the proposal on its agenda, it is likely that the reform is to clear the legislative floor during the current session following alterations, he added.
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