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The Impacts of Direct Tax Reform on Taiwan's Economy-A Computable General Equilibrium Analysis

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  • Lin, Yu-Hui
  • Chen, Dickens
  • Chang, Ching-Cheng
  • Hsu, Shih-Hsun

Abstract

In view of the expiration of the SUI (Statute for Upgrading Industries) at the end of 2009, the Ministry of Finance (MOF) is considering various revenue-neutral tax reform acts while abolishing the code comprehensively. The business income tax rate will be lowered by an appropriate amount so as to strengthen the international competitiveness of Taiwan’s industries. In addition, individual income tax rates and various deductions will be adjusted suitably. Besides, MOF also actively consider the tax base expanding proposals such as elimination of the tax exemption on the salaries of educators and military personnel. This study concerns about the impacts of abolishing SUI on Taiwan’s economy. Specifically, we will focus on the effects of the following reforms: (1) the reduction in tax revenues resulting from the lowering of business income taxes; (2) the raising of deductions and the lowering of individual income taxes, (3) the retention of four functional tax incentive measures from the SUI, (4) the evaluation of other direct tax reform policy simulations.

Suggested Citation

  • Lin, Yu-Hui & Chen, Dickens & Chang, Ching-Cheng & Hsu, Shih-Hsun, 2010. "The Impacts of Direct Tax Reform on Taiwan's Economy-A Computable General Equilibrium Analysis," Conference papers 332029, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332029
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