Although President Chen Shui-bian's (
A good number of academics and government officials doubt whether Chen's proposals will work, saying fiscal reality may not allow him to fulfill his campaign promises.
Chen's "333" welfare plan would provide free medical care for children under three years of age; NT$3,000 per month for senior citizens 65 and and older; and a 3 percent mortgage rate for young, first-time homebuyers.
Preliminary estimates put the cost of the "333" plan between NT$100 billion and NT$300 billion per year.
That's no small change, according to Lai Shi-bau (賴士葆), a legislator who serves on the Legislative Yuan's Finance Committee.
"Chen's welfare policy will require NT$300 billion. Because the 2000 fiscal budget does not contain the expenditure, I strongly doubt the policy will be carried out in the current fiscal year," Lai said.
Former Minister of Finance Paul Chiu (
"If the new administration does not alter the original budget to carry out the `333' welfare policy, the only other way is to borrow money," Chiu said.
"However, because the current national debt is more than NT$2.3 trillion, other options may be more suitable. Another choice would be to postpone public construction projects, and a third option is to raise taxes -- but that would require a consensus from the general public."
Financial analysts say there simply isn't enough money to pay for Chen's "333" policies, especially as Taiwan's expected WTO entry this year will lead to a shortfall in tax revenues.
"According to estimates by the Directorate General of Budget, Accounting and Statistics (DGBAS, 主計處), the total impact of WTO entry and the `333' welfare policy will increase the fiscal debt to NT$700 billion," said Norman Yin (殷乃平), a professor at Chengchi University. "If the new administration could cut spending by 10 percent, that would only result in savings of NT$100 billion. The remaining NT$600 billion will be hard to come by, even if a tax hike or other methods are employed."
Shea Jia-dong (
"According to DGBAS estimates, free medical care for children under three years old is likely to be the least costly of the three `threes' and, therefore, the first policy carried out," Shea said.
Lin Chuan (
"As to whether the new administration will be able to fulfill the campaign promises immediately, I am afraid that it still depends `how much money we have and then how much we can do'," Chuan said.
Earlier this month, Shea said taxes might have to be raised in order to pay for "333," saying, "There is no free lunch."
Chen rebuffed Shea's comment and promised not to increase taxes over the next four years. Even so, he also promised that his "333" welfare policy would be carried out.
Analysts said that if Chen could manage to do both without increasing the national debt, then he's a better number cruncher than previously thought.
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