Taiwanese Goverment To Allow Local Authorities More Access To Tax Revenues

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

10 April 2002

The Taiwanese Cabinet announced on Monday that it intends to allow local governments a larger slice of tax revenues.

A new version of the tax allocation law was presented for discussion by the Legislative caucuses with the intention of giving greater autonomy to local authorities. Cabinet Secretary-General Lee Ying-yuan and Director-General of Budget, Accounting and Statistics, Lin Chuan, who presented the amended law, stated that it adheres to the Taiwanese government's stated principle that the percentage of tax funds redistributed to municipalities and other local governments should be increased, rather than decreased.

However, the Cabinet officials also stated that the amount of general subsidies to local authorities will be cut, and that only long term national construction projects which are deemed to be in the interest of the entire region will be financed under the new law.

Mr Lin revealed that under the proposed amendment, 100% of business taxes will be redistributed to local governments, as opposed to the current 40%. The Budget, Accounting and Statistics chief also announced that the distribution ratio from tobacco, wine, and commodity taxes would be increased.

Under the terms of the new law, inheritance taxes, which are at present distributed to the municipalities and other local governments at a 50% and 80% ratio respectively, would be shared equally among all local authorities.

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