The national treasury managed to rake in more tax revenues than expected last year but may post negative growth this year as the economic downturn was bound to shrink assorted tax incomes, the Ministry of Finance said yesterday.
Tax revenues amounted to NT$1.755 trillion (US$52.96 billion) last year, exceeding the government’s target by NT$14.8 billion on a big increase in income tax from the previous year, the ministry’s report showed.
Income and house taxes gained 14.3 percent and 2.7 percent respectively while securities transactions, commodity, land and other taxes posted two-digit declines last year, the report said.
“It will take a miracle for tax revenues to maintain growth this year,” said Lin Lee-jen (林麗貞), head of the ministry’s statistics department.
“The economic downturn is expected to cut tax revenues across the board,” Lin said.
Securities transactions tax revenues plunged NT$38.3 billion, or 29.9 percent, last year from 2007 while commodity and land levy incomes fell NT$22.5 billion and NT$17.7 billion, or down 15 percent and 23.7 percent respectively.
Like its counterparts abroad, the government is embarking on a campaign of tax cuts and aggressive borrowing to spur economic growth. To that end, it has raised the deduction amounts for income tax and lowered inheritance levies. The NT$500 billion stimulus measure is set to clear the legislature next week.
Liang Kuo-yuan (梁國源), president of Polaris Research Institute (寶華綜合經濟研究院), said borrowing is inevitable in times of recession but suggested the government should channel part of the funds to help develop local green industries to help reduce the nation’s dependence on imported energy.
“The government should not confine the fiscal stimulus to spending programs that promise little help in upgrading local industries,” Liang said by telephone.
“The financial storm reveals the vulnerability of consumer product makers. It is time for the nation to develop other industries,” he said.
Liang, also an advisor with the Council for Economic Planning and Development, said the nation should tap into emerging light-emitting-diode, solar energy and fuel cell markets.