President Lai Promotes Tax Exemption for Low-Income Earners in Taiwan

President William Lai announced on Sunday that individuals with an annual income of NT$620,000 (approximately US$20,495) or less will be exempt from income tax when filing their returns in May 2024. This move is projected to benefit between 40 to 50 percent of the Taiwanese population, marking 2023 as a year with the “lightest tax burden” in the nation’s history.

Lai emphasized that the majority of income tax revenue will be drawn from the top 1 percent of earners. He highlighted the government’s intention to alleviate the tax burden on lower-income individuals. However, the announcement was met with skepticism from the opposition, particularly the Chinese Nationalist Party (KMT).

KMT legislator Hsu Yu-chen criticized the tax exemption proposal, suggesting it was merely a rebranding of existing policies. Hsu pointed out that tax exemptions and deductions have already been in place, including a personal exemption of NT$97,000, a standard deduction of NT$131,000, a salary deduction of NT$218,000, and a rental deduction of NT$180,000. Together, these measures amount to a total of NT$626,000 per taxpayer, which means that individuals earning NT$50,000 per month have already been exempt since the last tax filing period.

In response to the president’s announcement, Chen Pei-yu, secretary-general of the Democratic Progressive Party, acknowledged the need for further discussions with the Ministry of Finance regarding the proposed tax cuts. She stressed that comprehensive supporting measures would be essential for the policy to be effective.

The debate over Taiwan’s tax structure remains a contentious issue. Hsu emphasized that the current system is highly imbalanced. According to Ministry of Finance data, in 2023, approximately 43.8 percent of the 6.883 million income tax filings were tax-exempt. Only about 64,000 households, or 0.93 percent of all households nationwide, reported a net taxable income exceeding NT$5 million. This small percentage accounted for NT$207.9 billion, representing 43.3 percent of total income tax revenue, including dividend taxes.

Hsu’s remarks highlighted that less than 1 percent of wealthy households are contributing more than 40 percent of total income tax revenue for 2023, which underscores the broader issue of low incomes across the nation. The ongoing discussions around tax policies will likely continue to shape the political landscape in Taiwan as the government balances fiscal responsibility with the need for social equity.