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MOF to announce plan to tackle rising public debts
Taiwan News, Staff Writer
2014-02-24 01:27 PM
The Ministry of Finance (MOF) is expected to announce a plan on government spending control and raising income tax paid by financial institutions to tackle the rising public debts from the central and local governments. The plan was aimed at putting a ceiling on annual public debt at NT$100 billion (US$3.3 billion) and at raising the tax revenue by NT$70 billion annually. Financial institutions and large shareholders might be negatively affected.

Premier Jiang Yi-huah threw the plan to public at the Legislative Yuan last Friday stressing there is a pressing need to re-evaluate the business tax, corporate income tax, and alike.

Finance Minister Chang Sheng-ford is expected to announce the detailed plan Monday afternoon. The United Daily News reported that the proposal will likely include raising the income tax paid by financial institutions to three-to-five percent from the current two percent. The tax hike is expected to raise the revenue by NT$9 billion given a one-percent-hike under the proposed measures. According to the report, the government cut the tax for financial institutions to 2 percent from 5 percent during the Asian financial crisis and the rate remains unchanged ever since, which makes its duties appear relatively lower given the profit growth in the financial sector of recent two years.

In addition to the tax hike, the government is also considering reducing the level of tax deduction for corporate shareholders but raising it for salary earners and the disabled. The plan will be implemented step by step in the following two to three years in a bid to control the debt-to-GDP ratio to 38.6 percent (current level is estimated at 38.4 percent) while putting more efforts on tax fairness.

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