Premier Su Tseng-chang (蘇貞昌) yesterday approved a proposal by the Ministry of Finance to repeal the Stamp Tax Act (印花稅法) in a move that is expected to meet with strong resistance from opposition lawmakers.

A review of the proposal is expected to be prioritized at the legislative session that begins on Tuesday next week, and stamp duties could be repealed as early as next year.

The process of examining and auditing stamp duties is complicated, Su said, adding that it is inconvenient for the public, and the administrative cost of collecting the tax is high.

There is also controversy over double taxation, he said, adding that the tax has always been a source of complaints.

During a discussion at the Executive Yuan on May 21, Chinese National Association of Industry and Commerce chairman Lin Por-fong (林伯豐) proposed canceling stamp duties, Su said.

Lin expressed hopes that the government would abolish a tax system that is “out of date” to make trading easier, lower the cost of trading and make the development of Taiwan’s economy more efficient, Su said.

Su said he instructed the ministry to work toward the bill’s repeal “on the spot,” not because an “executive” had spoken, but because repealing stamp duties would benefit not only businesses and the economic, but also the public.

Many people have been taxed double as a result of stamp duties, except most people are unaware of it, he said.

Using the uniform invoice lottery as an example, he said that on top of a NT$2,000 (US$64.40) income tax, winners of more than NT$10,000 are subject to a NT$40 stamp duty when they claim their prize.

From 2014 to last year, the government collected an average of NT$11.2 billion in stamp duties per year, or about 0.5 percent of total net tax revenues, he said.

Despite stamp tax being not as important for government revenue as it once was, if it was canceled, the loss of a revenue for local governments would still need to be addressed, Su said.

If the legislature passes the repeal of the act, the central government would make up for the loss in tax revenue experienced by the local governments, he said.

In the future, this issue would also be dealt with in the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法), he said.

City and county governments would not experience a real loss in tax revenue, and they would not be “paying the bill” for the central government’s policy, he added.

The Chinese Nationalist Party (KMT) caucus held a news conference on Aug. 28 to express its disapproval of the move.

All fifteen KMT mayors and county commissioners also issued a joint statement opposing it, saying that the stamp tax is a stable source of income for local governments and that the repeal was proposed without consulting them.

Additional reporting by CNA