Rock Hsu (許勝雄), who chairs Kinpo Group (金仁寶集團), one of the biggest electronics groups in the country, yesterday urged the government to drastically cut taxes on local businesses as part of its broader plan to help the nation’s economy weather the worst downturn in decades.
As the global economy continues to plague the nation’s exporters and economic growth, the government should take quick action to spur domestic demand — the other pillar of Taiwan’s GDP — to help buoy the economy, Hsu said during a luncheon with reporters.
“We can do nothing about demand for exports, but we can try to simulate economic activity at home via the financial tools we have at our disposal,” Hsu said. “Government efficiency is crucial in these hard times.”
Hsu, a member of the Presidential Economic Advisory Panel, is helping the government hammer out a new economic stimulus package. Government statistics showed that the nation’s GDP this year could fall into negative territory for the first time since 2001.
To help lift private investment and domestic consumption, the government should halve business income tax, or at least lower the tax to 17.5 percent from 25 percent, Hsu said.
The proposed cut was bigger than an initial agreement reached by the tax reform committee led by the Ministry of Finance, which has sought to lower business income tax to 20 percent.
If approved by the legislature, the new taxation would come into force next year.
Kinpo owns the world’s second-largest notebook computer maker Compal Electronics Inc (仁寶), which makes laptops for the world’s biggest PC makers Dell Inc and Hewlett Packard Co.
Hsu said the government should scrap the tax on retained net profits in the near term to help local electronics makers obtain more operational cash, as a large number of local companies were losing money fast amid falling orders.
“The tax cut idea is not new,” Hsu said. “Government officials have been talking about tax reforms for a while and now is the time to realize that most countries are doing the same thing to save their economies.”
The global economy dropped at an unprecedented rate and could take longer to recover than expected, Hsu said.
A revival should begin early next year at the earliest, Hsu said. However, rather than the L-shaped revival predicted by Morris Chang (張忠謀), chairman of the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電), the revival would be a U-shaped one, he said.
Hsu said the government should invest in the future by helping students complete their school education using public funds, or help the unemployed receive training.
“I believe such education programs would help the nation generate the energy it will need to jump on new opportunities when recovery arrives,” Hsu said.