The deregulation of public land sales could help combat the national debt, Minister of Finance Christina Liu (劉憶如) said yesterday.
Liu outlined the potential strategy while detailing a government debt reduction plan, which aims to balance the nation’s budget and ease its worsening debt, at a meeting of the legislature’s Finance Committee yesterday
“Balancing the budget is the priority for debt reduction,” Liu said. “However, it is not easy to create a budget surplus for the settlement of debts.”
Liu added that the ministry would continue to budget repayment of principal and reduce the deficit in the future.
A Ministry of Finance report shows that the government’s overall budget deficit currently stands at NT$200 billion [US$6.77 billion].
Liu said that activating and utilizing idle state-owned assets could be an important tool for managing national debt, an indication that relaxing the limitations on public land sales might be considered.
The legislature amended a land-development law in December last year which banned the sale of public land plots over 500 ping (1,653m2) in a bid to curb mounting speculation in the housing market.
In addition, the ministry has not put up public land for tender in Taipei since March 2010 and even launched a program to buy back public land that had been previously sold to private entities.
A ministry task force on national taxation and finance is set to address the issue of national debt from the end of this month and Liu said she hoped its members would be able to assist the government in achieving a balanced budget.
Liu brushed aside speculation that the government would move to levy a capital gains tax on real-estate transactions any time soon.
“We have to wait at least until the registration of real transaction prices initiated in July to get some data for further discussion,” Liu said.
As of the end of last year, the government’s long-term debt — representing outstanding debt with a maturity of more than one year — stood at NT$4.769 trillion, an amount equivalent to 35.88 percent of average GDP over the past three years, the ministry said in a report.
If local governments’ outstanding long-term debt is included, the nation’s overall long-term debt balloons to NT$5.478 trillion, or 41.22 percent of the average GDP over the same timeframe, ministry data showed.
Both figures remain below legal the debt limit — which is stipulated in the Public Debt Act (公共債務法) as 40 percent and 48 percent respectively, but have risen over the past few years.
Under a definition outlined by the IMF, the nation’s debt — including both long-term and short-term figures — totaled NT$6.725 trillion at the end of last year, -ministry statistics show.
If the government could slash its deficit by NT$20 billion annually from this year, it would return to a balanced budget within a decade.
However, Liu said the government might need longer to reach this goal, citing global economic uncertainties.
Liu added that she was open-minded about a draft bill to impose a capital gains tax on securities transactions.
If other versions of the financial bill are better than the proposal outlined by the Cabinet, Liu said she would be willing to accept their ideas at the upcoming legislative discussions on the matter.
There are currently 10 versions of the capital gains tax in circulation, with the Democratic Progressive Party caucus and several lawmakers still planning to announce their own version.