The Ministry of Finance yesterday unveiled a medium and long-term financial improvement program that aims to reduce government outlays and generate tax revenues worth NT$1 trillion (US$30.9 billion) over eight years.
The program, including 10 major measures, is expected to raise tax revenues by NT$355 billion, cut expenditures by NT$295 billion and generate an extra NT$360 billion in income through better management of national assets, Minister of Finance Lee Sush-der (李述德) told a media briefing.
“If all proceeds smoothly, the program may yield an average of NT$125 billion a year between 2009 and 2016,” Lee said. “The estimate has yet to factor in potential economic growth and the multiplier effect.”
Lee conceded the nation’s finances are deteriorating with government debt hitting NT$3.88 trillion last month — 32.21 percent of GDP. The figure is expected to climb closer to the 40 percent ceiling next year as the government has to borrow more to rebuild areas hit by Typhoon Morakot.
“Government debt rose by NT$222.5 billion between May last year and this year,” Lee said, adding that the budgetary shortfall this year is estimated at between NT$140 billion and NT$150 billion on slumping tax revenues.
To improve the situation, the ministry plans to set the tax burden at 14.3 percent of GDP, national land utilization rates for non-public use at upward of 50 percent and debt principal reduction at more than 5 percent of yearly tax revenues.
“The nation’s tax burden, which sank to a record low of 11.9 percent in both 2002 and 2003, is relatively low compared with Japan, South Korea and the United States” where the burden exceeds 20 percent, Lee said.
Further, the minister said he intended to hike business taxes from the current 5 percent to 6 percent in 2013. The planned tax hike does not require approval from the legislature.
Lee said he would seek to release shares in national enterprises and companies with a government stake although previous attempts met with resistance from lawmakers and union workers.
“I think inadequate communication and transparency rendered past efforts controversial,” the minister said. “I will try to avoid that.”
The government controls more than 88 billion shares in different companies with an aggregate value of about NT$2.93 trillion in different firms, the ministry’s data showed. With better management, those shares can generate NT$167 billion while national assets can bring in another NT$189.5 billion, Lee said.
On cutting expenses, the minister said he would advise the Ministry of Foreign Affairs to buy properties rather than rent representative offices abroad.
Lee said there were many other measures that could be taken to improve the state coffers if all government agencies joined the effort.
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