Cabinet OKs income, business tax revisions
By John Liu ,The China Post
March 14, 2014, 12:09 am TWN
TAIPEI, Taiwan -- The Executive Yuan held a meeting yesterday to review measures needed to beef up the government's financial structure, and approved amendments to the business tax act and income tax act, in an effort to increase the government's tax revenues.
The meeting was chaired by Vice Premier Mao Chi-kuo (毛治國), and attended by representatives from the Directorate General of Budget, Accounting and Statistics (DGBAS), the Ministry of Finance (MOF) and the National Development Council. The team aimed to review the government's different expense items.
According to Executive Yuan spokesman Sun Lih-chyun (孫立群), the government currently runs an annual budget deficit of roughly NT$270 billion, and it was decided in the meeting the government will try to cut NT$45 billion out of this year's total expenses.
The Executive Yuan said the government can no longer neglect the budget deficit issue. To address this problem, the Ministry of Finance recently rolled out a package to beef up the nation's financial structure.
The package has been approved by the Executive Yuan, which also set up a designated team to review the implementation progress. Vice Premier Mao was tasked with leading the team, which is divided into income and expense units.
Goal of NT$70 Billion in Tax Revenue Per Year
Under the financial package's plan, the government aims to generate about NT$70 billion through tax revenue per year, which is about one-fourth of the NT$270 billion budget deficit. As such, the government must trim expenses to make up for the other three-fourths.
In order to generate more income, the MOF is carrying out taxation reforms. Amendments to the Value-added and Non-value-added Business Tax Act and Income Tax Act were deliberated and passed in the meeting yesterday, which will be submitted to the Legislative Yuan for review. The Cabinet said it marked the first step to beef up the government's financial structure successfully.
Sales taxes levied on banking and insurance industries will be hiked from 2 percent to 5 percent. With the new tax rate, the MOF expects to collect NT$20 billion in additional tax revenues per year.
The MOF also intends to make adjustments to the imputation tax system. With the adjustment, the MOF intends to halve the amount of deductibles that may be applied toward individual income tax. This new measure is expected to bring in NT$50 billion worth of taxes per year. The MOF also intends to levy 5-percent feedback tax on the rich, collecting NT$9.9 billion worth of additional tax revenue.
Other Measures to Tap Cash Flows
In order to tap new cash flows, besides making adjustments to the taxation system, the MOF will try to better utilize land assets in the government's portfolio, to review the privatization process so as to release stocks to the public, and to enhance the efficiency of government operations.
Yesterday's meeting discussed various subjects, including the government's obligatory expenses, basic operational needs and operation-related special funds. After internal discussion conducted with various government agencies, another meeting will be held within two weeks to further study the necessity of each of the government's expense items.