The only solution to the government's budget deficit is to reform the tax structure, Minister of Finance Lin Chuan (
The tax reform plan will cover the establishment of a minimum-tax scheme and a "green tax," as well as making adjustments to other forms of taxation such as income tax, business tax and inheritance tax. The two main issues concerning the proposed tax structure are equity and economic growth, Lin said.
The goal of taxation is to evenly redistribute wealth among the public, Lin said.
The government has been operating on a budget deficit since 1991, with the figure amounting to NT$337.3 billion (US$10.5 billion) this year, according to the Directorate General of Budget, Accounting and Statistics (DGBAS).
The exception was in 1998, when the government saw a surplus after the release of state-owned stocks into the market, which created revenue accounting for 23.8 percent of that year's GDP, while expenditures amounted to 23 percent, Lin said.
So far, the government's debt has reached a total of NT$3.99 trillion, DGBAS said.
Increasing tax rates to solve the deficit problem is no longer enough; the fundamental solution is to overhaul the current taxation structure, Lin said.
The budget deficit is the result of the government creating too many business incentive plans and tax premiums for certain industries, as well as loopholes in tax laws, according to Chen Tin-an (
A new tax structure is needed to support the country's future development, Chen said.
The minimum-tax scheme is a transitional plan aimed at promoting sustainable tax redistribution among the public, said Ho Chih-chin (何志欽), dean of the economics department at National Taiwan University.
The influence of changes in income-tax rates on the nation's tax revenue is small, while a value-added tax would have a more significant effect, Lin said.
In regard to the conception that inheritance tax is "stealing from the poor to aid the rich," Lin said that some of the policies are too loose, and they should be tightened.
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