The government’s pension reform plan may help ease the nation’s fiscal liabilities in the long term, Minister of Finance Chang Sheng-ford (張盛和) told lawmakers yesterday.
Chang’s remarks followed a report in the Chinese-language Liberty Times (the Taipei Times’ sister newspaper) yesterday that the government had NT$17.14 trillion (US$568.1 billion) in unfunded financial obligations as of the end of last year, up from NT$745.7 billion from a year earlier.
Citing Directorate General of Budget, Accounting and Statistics data, the Liberty Times said the obligations were not listed as public debts.
Most of the liabilities came from the pension plan for retired military personnel, civil servants and public-school teachers, which totaled NT$8.37 trillion at the end of last year, followed by NT$8.1 trillion for the labor insurance project, government data shows.
If lawmakers approve the reform package proposed by the Executive Yuan, the pension programs are not expected to face any financial problems within the next 20 to 30 years, Chang said during the question-and-answer session of a meeting of the legislature’s Finance Committee.
“Those liabilities have not become debts yet,” he said.
However, the nation is definitely facing a heavy debt burden, he said.
The central government’s long-term debt amounts to more than 37.67 percent of the three-year average GDP from the previous three years, closer to the debt ceiling of 40.6 percent, finance ministry data showed.
As of the end of March, long-term debt was NT$5.317 trillion, while short-term debt totaled NT$254.5 billion, the statistics show.
The ministry unveiled a fiscal reform package in February and the Finance Committee last week approved a bill to hike the business tax on banks and insurance firms from 2 percent to 5 percent and raise the income tax cap on households with a net income of NT$10 million or more a year from 40 percent to 45 percent.
The fiscal reform package aims to bolster the government’s bid to reduce the budget deficit, which stands at between NT$270 billion and NT$300 billion a year, Chang said.
Chang also said the ministry will continue to provide the ratios between the richest and poorest 5 percent and 10 percent of households, based on data of the annual consolidated income tax declaration, mainly for research use by taxation experts.
The ratio between the richest 5 percent and the poorest 5 percent stood at 85.21 in 2012, down from 94.84 recorded in 2011, an indication that the government’s efforts to raise various deductions over the past few years has helped shorten the gap, ministry data showed.
Regarding the property market, Chang said he has seen average prices for properties in New Taipei City come down slightly after a proposal to increase the tax rate for non-owner-occupied residential properties passed its preliminary review in the Finance Committee last month.
Chang said the ministry will strengthen tax inspection on leasing prices for most valuable shops in the urban areas, in which investors usually express the most interest, aiming to ease the rising pace of overall rents.
Additional reporting by CNA
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