The committee decided at its last meeting before the end of the current legislative session to defer review of the draft amendment until the next session.
The Executive Yuan had hoped the draft bill to reinstate income taxes for members of the military and teachers could clear the Legislature before the end of 2009 and be put into effect on Jan. 1 of this year. The bill had been unanimously endorsed by the Cabinet’s tax reform committee, which held its last meeting in late December before disbanding.
If passed, the amendment would affect about 110,000 military personnel and some 220,000 teachers islandwide and boost the government’s tax revenue by an estimated NT$16 billion (US$502 million) per year.
With the committee’s deferral of review of the draft bill, the ending of the exemption is expected to take effect next year at the earliest. This would mean that teachers and military members would have to file income tax returns in 2012.
The Ministry of Finance said that the move to scrap the exemption is based on the principle of tax fairness.
The government’s overall tax revenue is not expected to increase immediately after the amendment is passed into law because the additional tax income will be used to fund complementary measures, including subsidies and salary increases for military personnel and teachers.
The ministry said that it would work to ensure that the increased spending on subsidies and salary hikes would not outstrip the additional revenue generated by scrapping the tax exemption. (SB)