In response to calls by business leaders for tax cuts during Sunday's steering committee meeting for the planned cross-party economic advisory council (經發會), Director General of Budget, Accounting and Statistics Lin Chuan (林全) said yesterday that there is no room for a tax cut.
Several business leaders suggested tax cuts as a subject to be discussed at the first meeting of the economic advisory council scheduled for Aug. 24 to 26, but Lin said that current tax rates, in combination with the economic slowdown, provide no space for a reduction.
Lin made the remarks yesterday after meeting with New Party lawmaker Lai Shyh-bao (
However, the revenue budget for next year will drop more than 9 percent to NT$1.1 trillion, leading to a budget deficit of NT$400 billion, the highest deficit for any fiscal year in Taiwan's history.
Lai said he and Lin agree that unless the government enacts a package of tax reforms, it will be "impossible to achieve a balanced budget ... even in five or 10 years time."
Lai said the reason for tax cuts would be to spur investment, which would stimulate the economy, eventually yielding more tax revenue.
"Only when cutting taxes eventually boosts tax income will the Executive Yuan fully support tax cuts," Lai said.
Possible options for increasing tax rates include levying more income from teachers, public servants and military servicemen, or by taxing polluters, Lai said.
But Lai stressed that a shortfall of NT$400 billion would undermine the government's ability to implement policies such as allotting an additional NT$16 billion for an annual allowance to senior citizens and another NT$41.7 billion to cover the losses made by national stabilization fund in the local stock market.
While the government hopes to achieve a balanced budget, Lai said it needs to continue reducing expenses while developing new sources of income.
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