TAIPEI: A draft amendment to scrap taxes for military personnel and teachers at elementary and junior high schools from this year failed to get approval from a legislative committee yesterday.

The Finance Committee said related government agencies have not come up with complementary measures and decided to leave the issue until the next session, which is expected to open in February.

The Executive Yuan recently passed the draft amendment to the income tax law under which tax-free treatment for military personnel and school teachers would have been scrapped. The Executive Yuan had hoped that the new measure would be put into effect January 1 after clearing the legislature.

Explaining the reasons for the amendment, the "Ministry of Finance" said that with the new measure, 360,000 military personnel and school teachers will be affected, providing combined tax revenues of around NT$15.95 billion per year.

"Finance Minister" Lee Sush-der said in the committee meeting earlier that day that tax-free treatment for military personnel and elementary and junior high school teachers has been in place for several decades.

"But, with the changing times, the public now feels that the practice contravenes the principles of tax fairness," he said.

Lee said that "reimposing taxes on military personnel and school teachers is sure to take place, but there should be complementary measures for those affected, such as salary adjustments."

Legislator Lu Shiow-yen of the ruling Kuomintang (KMT) said some military personnel and school teachers have expressed willingness to accept being taxed, but feel there should be fair complementary measures.

She noted that the "Ministry of National Defense" explained in a position paper that "the amount being taxed will be subsidized," but the "Ministry of Education" said that "the tax collected will be used to subsidize elementary education," which, she said, is not fair to those in the education sector.

China Daily/CNA

(HK Edition 01/07/2010 page2)