Taiwan News, Staff Writer
2014-02-26 04:52 PM
The new tax was listed in a package of government measures presented by Premier Jiang Yi-huah in his work report to the latest session of the Legislative Yuan last week.
After listening to a report by Finance Minister Chang Sheng-ford on the subject, Ma said that several wealthy individuals had already voiced their support for the proposal. Ma was speaking in his capacity as chairman of the ruling Kuomintang at the party’s weekly Central Standing Committee meeting.
Chang’s package of tax reform measures would provide the central government with an extra NT$270 billion (US$8.9 billion) which could contribute toward the creation of extra wealth, Ma said.
The minister spent several months working out ways in which the government could avoid racking up more debts and crossing the maximum legal limit, Ma told his party’s leaders. He also reminded them that too many laws prevented the government from selling off shares in corporations and land, reports said.
In addition, the authorities should also keep significant funds aside for use in the event of major emergencies and disasters, making the government’s task balancing its spending and income more difficult, the president said.
Even though a new financial reform package was on the table, the Cabinet had not approved it yet, leaving room for suggestions, Ma said. Looking at initial public reaction, the proposal for a wealth tax had received a warm welcome from several wealthy individuals, according to the president. Hon Hai Precision Industry Co. Chairman Terry Gou, who frequently appears among Taiwan’s five richest individuals, recently expressed his approval of the wealth tax.
In addition to raising additional revenue, Ma also reminded the government to be frugal in its spending.
The president used the occasion to hold a plea for changes to the economy’s manufacturing structure and for regional economic integration. His administration has been hammering on the need for Taiwan to join the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership, even going to the extent of claiming that the country would be left isolated if the Legislative Yuan did not approve the service trade pact signed with China last summer.
Ma wants the Legislature’s present session to deal with the issue, but opposition has been fierce. After strong protests, the government agreed last year to allow lawmakers to review the pact clause by clause and to vote on each segment, but continued concern about the potential damage the accord could inflict on small and medium enterprises and on employment in general has prevented legislators from moving ahead.
The wealth tax, which has also been dubbed the “feedback tax,” will target financial institutions and individuals earning NT$10 million (US$330,000) or more per year. A new income tax bracket of 45 percent will be created, while the business tax rate for banks and financial groups will be hiked to 5 percent from 2 percent. On the other hand, lower income earners and people with disabilities will see higher deductible amounts.
The government faces a deficit of more than NT$270 billion, officials said.
Supporters of the new tax plan have praised the government for daring to submit it ahead of local and regional elections in November, but skeptics said the Legislative Yuan might try and tinker with the package.