The incoming Minister of Finance yesterday shifted his stance on tax hikes -- bringing it in line with his boss, the president-elect -- saying that he has no intention of raising taxes.
Shea Jia-dong (
If these measures fail to generate sufficient revenue, raising taxes would only be used as a final alternative, he said. However, Shea said he has no intention of proposing that taxes be raised in the near future, and that there was no discrepancy between his policy and that of president-elect Chen Shui-bian (陳水扁).
After announcing last week that raising taxes may be the only way to solve the current budget deficit, Shea was immediately criticized by Chen and several other incoming DPP Cabinet members and legislators.
Chen said pointedly that until an effective government is established to utilize fiscal revenue efficiently, there is no room for a tax increase. Cabinet members apparently responded by bluntly telling Shea to keep his "mouth shut" in the future and to communicate with the new administration first.
Shea voiced his unity with Chen yesterday after remaining silent on the topic since last Friday and attempted to explain his way out of the public furor created by his remarks.
"The reason that the general public is opposed to raising tax is that certain past government expenditures have not been effectively utilized," he said.
"Also, many citizens do not think that the present tax system is fair. Therefore, with the current fiscal difficulties, the first task is to control fiscal expenditures effectively and to improve fairness in the tax system -- only then will there be room to consider raising taxes," Shea said.
Meanwhile yesterday, DPP officials confirmed that despite facing budgetary criticism, Chen's pre-election promise to enact the so-called "333 welfare policy" will proceed on schedule next year. That policy, scheduled to be launched next July, promises a monthly subsidy of NT$3,000 for senior citizens, free medical care for children under 3 and a 3 percent discounted mortgage rate for first-time homeowners, DPP officials said.
In related news, the Ministry of Finance reported April tax revenue stood at NT$114.3 billion -- up 2.3 percent over the same period last year. However, total tax revenue for the last 10 months was NT$1.05 trillion, or 0.4 percent less than the same period last year.
At the current rate of decline, total tax revenues are expected to be 3.5 percent under budget estimates, resulting in a shortage of NT$100 billion in the current fiscal year, said Shu Gwou-chung (許國忠), director of the finance ministry's Statistics Office.
According to Shu, a number of factors have contributed to the shortage. "Factors include the 921 earthquake, the 2-in-1 tax and a NT$50 billion drop in business tax revenues from financial institutions as a result of the 2 percent business tax rate cut.
Total tax revenue is unlikely to reach the NT$2.0 trillion fiscal revenue target for the current fiscal year."
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