Gov't set to grant more tax deductibles to families on middle and low incomes
By John Liu, The China Post
September 3, 2014, 12:03 am TWN
TAIPEI, Taiwan -- The government may model South Korea's real estate tax system to grant more tax deductibles to middle- and low-income families, while having the rich pay more taxes.
In a press conference held yesterday, Finance Minister Chang Sheng-ford (張盛和) used the analogy of “pulling a goose's feather” to point out the government's guiding principle in tax collection: the purpose is to pull as many feathers as possible while keeping the goose's pain to a minimum, Chang said.
In order to suppress Taiwan's surging housing prices, the Ministry of Finance (MOF) is planning to roll out a new measure to take both land and housing values into consideration when accounting for housing gains tax.
In South Korea, if individuals have only one property under their name, and if the house is worth less than 900 million Korean dollars (equivalent to NT$28.7 million) and has been held for at least two years, the owner will qualify for a lower tax rate.
It was recently reported in local media that the government will apply a similar approach and apply higher tax rates on properties worth more than NT$25 million, affecting some 300,000 people in Taiwan.
Chang denied the rumor yesterday, saying that the exact amount has not been determined. He confirmed however, that Taiwan will reference tax systems in other nations, including South Korea, Japan, France and Australia, before establishing a system that is more suitable for Taiwan.
Also in South Korea, those who have held their properties between three and 10 years will be eligible for a deductable rate between 10 and 30 percent. If the property is for self-use, then a higher deductable rate between 24 and 80 percent may be applied.
Taiwan may reference this system and set up different deductible rates based on the number of years of property holding, Chang said.
A Clause to Deny Tax Deductions for the Rich
Chang confirmed yesterday that the government is considering making a new regulation that will bar the wealthy from taking advantage of tax deductions.
While the government plans to introduce a new taxation system to exact real estate taxes based on real gains in property sales, it would only be fair if the rich are excluded from the new system, Chang said, adding that the government has not yet come up with a plan to see this through.
Under the current system, the government will repay taxes to those who re-purchase a home after selling their previous home, as these people are purchasing real estate for dwelling purposes instead of speculative investment. The MOF is considering not exacting taxes from these people for properties with a “lower dollar value,” said Chang, adding that this will also save the government the task of tax repayment.