The Ministry of Finance will make income tax reform its top priority this year while safeguarding the interests of state-run financial institutes that are due for board reshuffles, Minister of Finance Sheu Yu-jer (許虞哲) said yesterday.
The ministry plans to raise the business income tax rate from 17 percent and lower the cap on personal income tax, which stands at 45 percent, to help retain skilled professionals and make the distribution of the nation’s wealth more equitable, Sheu said without providing details.
“The ministry will no longer stand by the requirement to keep overall tax revenues unchanged, as tax losses appear necessary to support the economy for the time being,” Sheu said.
Sheu had previously said that tax cuts for some must entail tax increases for others to protect the nation’s financial health.
The ministry will today review a medium-term tax reform study by academics and propose a reform bill in early May as part of the President Tsai Ing-wen (蔡英文) administration’s plan to overhaul the nation’s pension system to make it sustainable, Sheu said.
Several academics have suggested raising corporate income taxes to 20 percent and lowering the ceiling on high-income earners to 40 percent.
The wide gap between personal and corporate income tax rates encourages the establishment of dummy companies, they said.
They also suggested separate taxation or partial exemption for dividends from stock investments to even out the tax burden on domestic and foreign investors, so that domestic investors could return to the local stock exchange.
Sheu said the ministry needs more time to contemplate the issue and the final figures would likely not be the same as those recommended.
Companies from different sectors have voiced concerns about the government’s planned tax hikes.
General Chamber of Commerce (商業總會) head Lai Cheng-yi (賴正鎰) said tax hikes would cause greater harm than new labor rules on workdays and overtime pay.
Meanwhile, the ministry, which owns significant stakes in eight state-run financial institutions, will try its best to protect its interests in Taiwan Cooperative Financial Holding Co (合庫金控) and Chang Hwa Commercial Bank (CHB, 彰化銀行), which are to re-elect board members this year, Sheu said.
Sheu said the ministry will not buy authorization letters from shareholders, but it has delegated a task force to take measures to maximize its representation, he added.
That suggests a continued standoff against Taishin Financial Holding Co (台新金控), the largest shareholder with a 22.5 percent stake in Chang Hwa Bank.
Chang Hwa Bank posted record revenues for the past two years after government representatives won a controlling majority of the lender’s boardroom in late 2014, National Treasury Administration Director-General Frank Juan (阮清華) said.
“Shareholders know which side to partner with to protect their interests in light of earnings results,” he said.
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