Tourism officials continued to press the government to either cut the 5 percent value-added tax or delay collection of last year's corporate income tax this May in order to help the sector through the fallout from severe acute respiratory syndrome (SARS).
"The tourism sector may not see any signs of recovery for the next six months," Tseng Sheng-hai (曾盛海), chairman of the Taipei Association of Travel Agents, said at a legislative hearing yesterday held by the KMT and PFP caucuses.
Citing a government report, Tseng said that the sector is losing NT$9 billion a month in sales abroad as the SARS outbreak has kept residents at home and tourists away from Taiwan.
"With a drop of more than 70 percent, the sales slump is sure to drive up unemployment," he said.
The government has recently promised NT$1 million in preferential loans to hard-hit companies. But Tseng expects the loans will do little to keep the industry afloat.
PFP Legislator Li Yong-ping (李永萍) and her KMT colleague Chu Fong-chi (朱鳳芝) expressed support for the proposal and pressed the central government for tax breaks.
"The Executive Yuan should follow the precedent set by the 921 earthquake relief plan and use money from its secondary reserve fund to assist the industry with tax payments," Li said.
But Vice Minister of Finance Sam Wang (王得山) said the cash-strapped government would be hard-pressed to forego tax collection.
"It's not within the Ministry of Finance's authority to offer any tax breaks since there is no legal basis for the cut," Wang said at the legislative hearing, adding that legal revisions would be needed for the ministry to enact any tax cut.
Wang said the industry's tax-cut proposal may be unfair.
"If tourism-related businesses profited last year, they should report their earnings and pay their taxes this May," Wang said. "Tax collection in May should have nothing to do with SARS' impact."
Wang suggested the industry borrow money to survive the downturn, saying that his ministry has asked the Small and Medium Business Credit Guarantee Fund (中小企業信保基金) to grant similar preferential loans to the tourism sector.
But Wang was interrupted by KMT Legislator Ho Tsai-feng (
Wang promised to look into agencies' credit situation.
Meanwhile, the central government has made arrangements for its 240,000 employees to take vacations by August in order to pump much needed cash into the local tourism industry, said Su Cheng-tien (
Su said that the ministry plans to take the lead and have its 100,000 staffers take their annual trips this month and in May. It is estimated the trips alone will create some NT$600 million in new revenues.
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