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Weapons of Mass Destruction (WMD)

Tax exemption for teachers, military passes legislative review

ROC Central News Agency

2010/05/10 16:41:21

By Ho Meng-kuei and Fanny Liu

Taipei, May 10 (CNA) A bill to scrap income tax exemption for military personnel and teachers passed an initial review by the legislative Finance Committee Monday, which will affect 340,000 people if it finally clears the legislature floor.

If everything goes smoothly, the draft Income Tax Act amendment will take effect in 2011, giving the government an estimated NT$11 billion (US$349 million) in increased tax revenues annually.

Finance Minister Lee Sush-der said major progress is being made in the moves to scrap tax exemptions for military personnel and teachers.

"An issue that has been left unsolved for a few decades has been dealt with to a certain extent today," said Lee.

The proposal to end the tax exemption has been discussed since 1990, but has been blocked for various reasons such as pressure from vested interests and election considerations.

Among the expected increased tax revenues of NT$11 billion, about NT$7.2 billion will come from teachers, with the remaining NT$3.8 billion coming from military personnel -- both lower than estimates of NT$9.8 billion and NT$5.7 billion, respectively, put forward in 2005.

Some legislators have argued that as the estimated increase in tax revenues from teachers -- which will be used to improve the educational environment -- is lower than previously forecast, the government should allocate budget to make up the shortfall.

However, others have attributed the gap to income tax rate adjustments and have said that the government should not allocate additional budget to fill the gap.

Although the legislators did not reach consensus on this aspect of the issue, the committee still decided to pass the review and send the bill for cross-party negotiations prior to taking it to the legislative floor.



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