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June 26, 2017

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Gov't to focus tax enforcement on the very wealthy

TAIPEI, Taiwan -- The Ministry of Finance (MOF) will focus its taxation enforcement on the very wealthy, such as owners of storefronts that command high rent, Finance Minister Chang Sheng-ford (張盛和) said yesterday.

Chang visited the Legislature yesterday to answer the Finance Committee's questions. In its taxation enforcement effort, the MOF will focus on tracking down the very wealthy while turning a blind eye to the less wealthy, according to Chang.

The ministry recently rolled out various measures in order to suppress Taipei City's rising housing prices. Taipei City Deputy Mayor Chang Chin-e (張金鶚) indicated recently that housing prices may drop 30 percent in the next two years. As buyers expect a quick collapse of housing prices, the housing market has dropped to a low point, real estate businesses said.

However, Chang said yesterday that it is unlikely for housing prices to come down 30 percent in two years. However, data shows that there has been some downward adjustment to housing prices in New Taipei City, which is "very satisfying," Chang said.

Some legislators pointed out that while housing prices are coming down, rents are still going up, increasing the financial burden on young people. In response, Chang said that real estate investors tend to acquire and rent out "golden storefronts" with heavy visitor traffic and/or apartments near schools, and that due to strong demand, rents are unlikely to go down. The government will focus its taxation enforcement on storefronts, as part of its efforts to track down the very wealthy first, Chang said.

Declining Income Disparity in Taiwan

Based on collected tax returns data in 2012, the government divided the nation's income into 20 brackets of income levels. According to the MOF, incomes of the bottom 5 percent of earners averaged NT$53,000, while the top 5 percent averaged NT$4.516 million — 85.21 times higher. The national average stood at NT$900,000.

Earnings of the top income bracket in 2011 were 94.84 times larger than those of the bottom bracket. As such, it appears that there is a reduction in income disparity between the rich and the poor. The extent of income disparity in Taiwan also appears to be lower than that of other nations.

While income levels have risen in most countries such as the U.S., Japan and Singapore over the past decade, their income disparities have also widened, the MOF said.

According to Chang, the government's policy to levy higher income taxes and to lower deductibles has contributed to the reduction of earning disparity in Taiwan.

The MOF said previously that the nation's income level will be divided into five brackets instead of 20, so that it is more in line with the systems applied in the global community. However, critics have argued that the new system is intended to cloud the country's income disparity.

However, both Chang and Shih Su-mei (石素梅), minister of the Directorate General of Budget, Accounting and Statistics, stressed that the new five-bracket system is widely used in the global community, and that the 20-bracket system should never have been adopted to determine income disparity.

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