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Cabinet approves proposal to abolish stamp tax

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The Cabinet on Thursday approved a proposal to abolish the Stamp Tax Act as part of government efforts to reform the tax system and prevent double taxation. The proposal, drafted by the Ministry of Finance, will now be forwarded to the Legislature for deliberation.

Premier Su Tseng-chang said the stamp tax is an outdated duty dating back to 1934 when times and conditions were altogether different. As the nation's tax system matured, the government has built a comprehensive mechanism for managing economic activities. The revenue generated by the stamp tax has also fallen in proportion over the years to a mere 0.5 percent of the nation's overall tax revenue, rendering it less important as a source of income.

The stamp tax has been a constant cause of complaint for both the public and the administrative agencies, the premier pointed out. Cumbersome procedures for checking the tax have burdened the public and brought about high auditing and collection costs for administrators. Levying the stamp tax also leads to double taxation in many cases. Elimination of the tax will benefit not only businesses and economic activities but the general public as well.

As for resulting losses of revenue into local coffers (the stamp tax is levied by local governments), the premier said the central government will adopt a modern "tax reduction and simplification" reform policy designed to spark economic development while preventing fiscal losses for local governments. Should the proposal be approved by the Legislature, the central government will apply this principle and allocate special funds to help local governments cover all revenue shortfalls. These allocations will also be incorporated into the Act Governing the Allocation of Government Revenues and Expenditures to ensure cities and counties do not see unfair decreases in tax revenue.

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