Taiwanese Finance Minister, Vice Premier Discuss Tax Reforms

by Mary Swire, Tax-News.com, Hong Kong

18 June 2008

Taiwan's Vice Premier, Chiu Cheng-hsiung, and Finance Minister Lee Sush-der have both recently discussed the government's plans for tax reforms, indicating that 2009 is likely to be a crucial year in this regard.

According to a China Post report, speaking on Saturday during a tax reform forum hosted by the Chunghua Association of Public Finance, Mr Chiu suggested that reforms proposed by the newly installed Kuomintang government are expected to become law by June 2009.

However, he reportedly rejected calls for tax sops for those on lower incomes, arguing that reducing the very small amount of taxes paid by this group would be problematic.

Meanwhile, giving his first interview to overseas media since taking up the role of Finance Minister, Lee Sush-der acknowledged to Reuters that existing tax commitments and subsidies are putting pressure on the economy, but predicted an improvement in that area next year.

"Of course there is pressure on our fiscal situation," he told the news service, before going on to add that:

"Next year's (deficit) won't be that huge. About one percent should be quite reasonable. If our revenues exceed target and the economy is doing well, then the deficit won't be that huge."

He further suggested that:

"It's not necessarily a bad thing for the government to borrow money for infrastructure investments because that will spur economic activity and in turn, boost tax revenues."

Ahead of his election earlier this year, President Ma Ying-jeou pledged an "economic renaissance" for the territory.

Among his planned tax reforms are a reduction in corporate and gift and inheritance taxes, to increase Taiwan's regional competitiveness, and the imposition of an energy tax in order to lower carbon emissions.

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