Lin says MOF working to reduce deficit

Minister of Finance Lin Chuan (林全) yesterday said the ministry is taking steps to narrow the government's budget deficit, including raising the value-added tax next year, as part of its effort to tap new income sources.

Lin made the remarks at a meeting of the legislature's Finance Committee yesterday, held to discuss how to improve the nation's worsening finances.

According to a report from the Directorate General of Budget, Accounting and Statistics, the central government's total outstanding public debt is expected to reach NT$3.94 trillion (US$101.47 billion) by the end of next year, accounting for 37.3 percent of the average GNP for the previous three years.

The Public Debt Law (公債法) sets the ceiling at 40 percent.

Lin reported that the finance ministry plans to push forward the second stage of tax reform next year by increasing the value-added tax by one to two percentage points from the current 5 percent, and canceling entertainment and stamp taxes, in the hope of expanding the tax base and raising the proportion of consumption taxes.

This follows the ministry's first-stage efforts to draft an alternative minimum tax proposal, which is pending legislative approval.

But, as the government has set the goal of balancing the budget by 2011, People First Party Legislator Christina Liu (劉憶如) slammed the failure to adopt active measures to narrow the deficit.