Taipei Times: The Alternative Minimum Tax proposal is currently pending legislative approval, although nearly 40 percent of local businesses have said this measure would push them to move part of their production offshore, according to a recent survey by the Chung-Hua Institute of Economic Research (中經院). How would you rally support for your tax scheme?
Lin Chuan (
Compared with Taiwan's main economic rivals -- Hong Kong and Singapore -- our minimum corporate tax rate of 10 percent is not higher than theirs. Therefore, I don't think the proposal will affect businesses' decisions on which country to invest in. China does not necessarily have a lower rate in the long run, as its preferential tax schemes are only valid for the first five years.
PHOTO: CHANG CHIA-MING, TAIPEI TIMES
Furthermore, as China has a different industrial structure, we have seen many of Taiwan's traditional, labor-driven industries lose their competitive edge and migrate to China for its cheaper labor costs. This situation will not change simply because we implement a different tax system.
What's more important is our competition with Hong Kong and Singapore, as they have industrial structures similar to that of Taiwan. But our tax rate is lower than theirs.
TT: What are the obstacles and difficulties you face in implementing the long-anticipated tax reforms?
Lin: We need to persuade a great number of people [of the new system's advantages], as this is a democratic society and the legislature is dominated by opposition parties. We must garner public support and consensus to push forward the reform process. We don't have many precedents to follow, and therefore we need to spend more time to help people understand the reforms, the reasons why they are necessary, their basic spirit. We must also continue to communicate with business groups to win their support.
I mentioned in May that I will allow myself one more year to work on the tax reforms. By next May, when the next legislative session ends, if we still fail to get the new tax measures implemented, I would rather leave my post and let someone else who is perhaps more capable do the job. This is because I want to accomplish something during my tenure as finance minister.
TT: The finance ministry has made many compromises to get the Cabinet to pass the minimum tax scheme. What are your plans for the second stage of reforms?
Lin: Our next step after completing the income-tax reforms will focus on reforming consumption tax. Making some breakthroughs in pursuing fair taxation has been our top priority, as this will promote rationality and public acceptance of future taxation improvements. We have gained consensus on increasing the value-added tax, decreasing commodity tax items, canceling the stamp tax and overhauling the entertainment tax. These will be our targets in the next stage, if the legislature passes the minimum tax scheme by the end of the year.
In addition, imposing a tax on overseas income and reducing the inheritance and gift taxes will also be addressed in the next stage. People have been talking about attracting capital to flow back. I believe the most effective way of doing this is to levy taxes on people's overseas property while reducing income tax at home. This way, they'll find there is no difference where their capital is placed, which will naturally lure their money back to the home market.
TT: Introducing banking reforms to strengthen the nation's overcrowded financial sector is another major task the ministry faces. Will the ministry be able to meet the goal of halving the number of state-run banks by the end of the year?
Lin: We are making an all-out attempt to promote banking mergers, but there are always risks, even though we hope to complete the task 100 percent. We are not pushing mergers just for the sake of merging, but to create momentum and boost competitiveness.
Pushing forward mergers of state-run banks is only a catalyst, as we hope this will stimulate private lenders to undergo corporate restructuring or seek merger targets to help internationalize the market.
TT: Indignant employees of state-run Taiwan Business Bank (台企銀), which is slated to open the tender for its share sale this weekend, have argued that the government should maintain control over banks such as theirs, which contribute to the economy by granting loans to small and medium-sized enterprises (SMEs). How do you respond to their appeal?
Lin: The public announcement on Taiwan Business Bank's share sale clearly stated that the buyer must maintain this business line and continue to serve SMEs. We want the bank to be profit-driven, so that it will benefit its shareholders while standing firm even in the face of fierce competition. Of course, employees of any given state-run bank will oppose mergers, but we have to consider whether their requests are reasonable.
TT: The Chinese Nationalist Party (KMT) still has some property it acquired by questionable means in the days of single-party rule. Will the government be able to retrieve these assets soon?
Lin: The KMT has agreed to return the assets, but the prices it offered are not reasonable. We suggest that it either sell the five movie theaters it owns based on market prices, which places their value at around NT$1 billion (US$30.84 million), or just give the theaters back to the government. Because there is no law covering this specific instance, we can only resort to moral persuasion. The KMT should know that possessing such disputed assets is not healthy for the party in the long run.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts