Taiwan approves 'rich man's tax'

Taiwan approves 'rich man's tax'

Taiwan approves 'rich man's tax'

Taiwan's parliament has approved a so-called "rich man's tax" on nearly 10,000 of the island's wealthiest people in a bid to narrow the widening income gap.

Starting next year, those with annual net income of over USD 333,000, or the richest 1.5 per cent of individuals or families, will be subject to a 45 per cent income tax rate, up from the current 40 per cent, said the finance ministry.

The revised income tax law passed by parliament yesterday also includes business tax hikes on banks and insurers as well as more tax deductions for low-income families, salarymen and the disabled, the ministry said.

It is expected to generate an extra 65 billion Taiwan Dollars more a year in revenue for the government, including 9.9 billion Taiwan Dollars from the richest people as well as around 20 billion Taiwan Dollars from the banking and insurance sectors.

Finance minister Chang Sheng-ford has said that the taxation reform was aimed at improving income distribution and was backed by tycoons such as Foxconn Group founder Terry Gou.

Taiwan's income gap reached a record level in 2011, as the wealthiest families earned 96 times more than the poorest, according to the latest official data.

The bottom five percent of families reported an average annual income of 48,000 Taiwan Dollars, compared with 4.63 million Taiwan Dollars earned by the top five percent in 2011, based on their income tax filings.

Observers have blamed the rapidly widening gap between the rich and the poor as one of the reasons behind a recent string of anti-government protests.