Fri, May 30, 2014 - Page 13 News List

Minister upbeat on taming debt ratio

COMMITTEE MOVES:High-earning households will see a 5 percent tax increase after legislators approved part of the finance ministry’s fiscal reform package

By Amy Su  /  Staff reporter

The government aims to reduce the nation’s debt burden to less than 38 percent of GDP next year, from a forecast of 38.09 percent this year, supported by ongoing economic recovery and cost controls, Minister of Finance Chang Sheng-ford (張盛和) said yesterday.

The government sees the ratio between the outstanding balance of its long-term debt and average GDP over three years as the nation’s debt ratio, with the debt ceiling set at 40.6 percent of GDP.

This year, the outstanding balance of the central government’s long-term debt could amount to 38.09 percent of average GDP from 2012 to this year, Chang said, citing the ministry’s data.

“We are confident that Taiwan’s debt ratio will continue to improve this and next year,” Chang told a meeting of the Finance Committee at the legislature in Taipei.

Following the ministry’s plan to launch a fiscal reform package, as well as the ongoing economic recovery, the nation may boost its tax revenue and better control costs next year, further narrowing the government’s budget gap, Chang said.

Chang said he is optimistic that the nation’s debt ratio will further improve to below 38 percent next year, adding that the ministry expects to leave debt space at about 3 percent for the next government.

Earlier this month, the legislature passed a proposal to raise the business tax on both banking and insurance institutions from 2 percent to 5 percent.

Meanwhile, lawmakers agreed to adjust the tax brackets for consolidated income, raising the taxation rate for households with annual taxable income of more than NT$10 million (US$333,650) to 45 percent, from 40 percent.

Both measures are part of the ministry’s fiscal reform package and might raise annual tax revenues by NT$30 billion.

In related news, Chang said the nation’s exports this month may post growth from the same period last year after expanding for the third consecutive month last month.

“Outbound shipments in the first three weeks of this month all showed year-on-year growth,” Chang told reporters, indicating the strong possibility that this month’s exports would maintain the trend.

The nation’s outbound shipments were valued at US$99.92 billion in the first four months of the year, up 2.3 percent from the previous year, ministry data showed.

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