The China Post news staff
TAIPEI, Taiwan — The Cabinet yesterday approved a spate of tax reduction programs, under which the inheritance and gift tax rates will be sharply cut to 10 percent from a maximum level of 50 percent.
Premier Liu Chao-shiuan issued a green light to the tax-cutting programs at a weekly Cabinet meeting, in a bid to ease the tax burden on individual taxpayers and attract Taiwanese investors abroad to remit their funds back to Taiwan.
Liu said at the meeting that the tax cuts are designed to build a more reasonable and robust taxation environment to further spur economic development. All the tax reduction proposals will have to be ratified by the Legislative Yuan to become effective. If the proposals clear the legislative floor before the end of this year, they will be put into practice in 2009.
The most remarkable aspect of the programs is that the inheritance tax rate and gift tax rate will both be slashed to a uniform level of 10 percent from the highest progressive rate of 50 percent, and the existing tax bracket of under 10 percent will be reduced to zero.
Premier Liu was determined to set the inheritance and gift tax rates at 10 percent, as both Vice Premier Paul Chiu and Finance Minister Lee Su-der showed strong preferences for the 10 percent rate at the tax reform committee meetings, although quite a few members of the committee have insisted on setting the rate at 30 percent.
In addition, the inheritance tax exemption amount will also be sharply boosted to NT$12 million from NT$7.79 million, while the gift tax exemption amount will be doubled to NT$2.2 million from NT$1.11 million. Among other tax reduction programs is the standard tax deduction amount, which for any single taxpayer will be boosted to NT$60,000 from the existing NT$46,000, and the amount for married couples filing together will be raised to NT$120,000 from NT$92,000, when they file personal consolidated tax statements. Meanwhile, the special tax deduction for salaries will be hiked to NT$100,000 from NT$78,000, and that for disabled dependents will also be raised to NT$100,000 from NT$77,000.
Deductions for education expenses will be increased to NT$25,000 per person from the current NT$25,000 per household.
Up to 3.6 million households, or roughly 70 percent of the total, will benefit from the proposed increases of the four deductions, government officials said.
If the tax deduction increase proposal is passed by the Legislative Yuan, the officials said, local taxpayers will be able to enjoy such benefits when they file their tax returns for their 2009 incomes in 2010.
The deduction increase plan, if passed, will cost national coffers an estimated NT$15.3 billion, the officials said, adding that salaried people will benefit from the increased salary deduction. Salaries have traditionally accounted for 75 percent of total income tax revenues.