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June 23, 2017

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License tax exemption gives unfair leg up

TAIPEI, Taiwan -- An overly lax vehicle license tax exemption regulation for motorists with disabilities has allowed some opportunists to gain an unfair advantage, Control Yuan members Cheng Jen-hung (程仁宏) and Yang Mei-ling (楊美鈴) said yesterday.

According to a report complied by Cheng and Yang, there has been an increase in such cases in recent years, and there appears to be more and more vehicle license tax-exempt luxury automobiles with a high engine displacement. Tax-exempt vehicles with an engine displacement of 3,001 c.c. and above number more than 26,000, with the highest number of those being cars made by Mercedes-Benz, followed by Lexus, Nissan, BMW, Toyota, Cadillac and Volvo.

Lax regulations have allowed some opportunists to avoid taxation, leading to a loss in both revenue and the principle of fair taxation, the Control Yuan members said.

According to their report, as of June 2013 there were over 620,000 such vehicles, amounting to a total tax exemption of NT$6.58 billion, more than 26,000 of which had an engine displacement of 3,001 c.c. and above. Of those 26,000, 8,150 were Mercedes-Benz vehicles, followed by 5,319 Lexus vehicles, 3,226 Nissan vehicles, 1,638 BMW vehicles, 1,121 Toyota vehicles, and others.

  The vehicle license tax rate is levied according to engine displacements; the larger the engine, the higher the tax.

Because the tax exemption covers all engine displacements, those able to afford luxury vehicles and their family members end up enjoying larger tax cuts, whereas those who can only afford inexpensive vehicles get smaller tax cuts, the phenomenon of which is indicative of vertical inequality, the Control Yuan members said.

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