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Gov't to Narrow Income Gap via Taxation Measures

2010/09/30 | By Philip Liu

Taipei, Sept. 30, 2010 (CENS)--The government will resort to taxation measures to narrow income gap, including the levy of special consumption tax on high-priced goods, services, or deals, higher tax on realty speculation, and the pushing of energy tax, concluded the panel for improving income distribution, under the Executive Yuan (the Cabinet), yesterday (Sept.29).

During the meeting of the panel, presided by Vice Premier Sean Chan, Lee Sush-der, finance minister, pointed out that the special consumption tax, or luxury tax, should cover high consumption, high assets, and high income, such as the purchase of imported luxury cars or luxury houses, in accordance with the widespread expectation in the society.

The Ministry of Finance (MOF) has reportedly pinpointed gas-guzzling large sedans, such as those with over NT$2 million price tag or over 3,000 cc of engine displacement, as a priority target for the projected luxury tax.

Lee noted that a major deficiency of the existing realty tax is its inability to tax multiple deals of high-priced land and houses in a short time, since the officially assessed land value is adjusted only once a year, enabling realty speculators to evade land value increment tax for their short-term deals.

As a result, the Ministry of Interior is studying the feasibility of flexibly adjusting the officially assessed land value, whenever wild fluctuation in realty prices occurs.

Lee remarked that the increased revenue from the levy of energy tax can be used to lower personal income tax and eliminate commodity tax on daily necessities, such as beverage and home appliances, thereby helping narrow income gap.

Sean Chen pointed out that except the projected taxation measures, the government also plans to narrow income gap via other measures, such as raising the poverty line to put extra 852,000 persons, or 3.68% of the population, under the coverage of government's poverty subsidy program.