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Government must reform tax structure

The government should consider tax reform and re-examine the preferential tax-cut policy for the high-tech sector, in the wake of growing government debt in recent years, a local newspaper reported yesterday, citing Director-General of Budget, Accounting and Statistics Liu San-chi (劉三錡).

The government is strapped for funds and has decided to issue more bonds in order to make up the estimated shortfall of NT$100 billion in tax revenues caused by the SARS outbreak and the global economic downturn.

But Liu said the government should not constantly rely on government debt issues to fill a revenue shortfall, which he said will adversely affect the nation's fiscal difficulties in the long run.

"Based on the speed of debt growth, plus a plan to raise NT$300 billion for the proposed public construction through new debt in the following three years, the government's debt will increase to account for 40 percent of the country's GNP over the next four years," Liu said in the report.

"That will worsen the current fiscal problem and render a negative impact on future economic recovery," he said.

Liu is concerned about the government's five-year tax reduction incentives to the high-tech sector, saying that the policy won't accomplish what it is expected to achieve.
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