In the 2002 global competitiveness report released by the Inter-national Institute for Manage-ment Development in Switzer-land, Taiwan's ranking dropped from 18th place to 24th. This is not the first time that renowned international institutions have lowered Taiwan's ranking. Since 2000, Taiwan's credit rating has been downgraded by such major financial institutions as Standard & Poor's, Moody's and Fitch.
Last year's global recession seriously slowed Taiwan's economic growth. But the eco-nomy's debt-ridden condition and the lingering deficits of the central government were key factors in the decline of Taiwan's competitiveness.
Statistics show that the government's budgets have not been balanced since 1998. The government cannot make ends meet and has to face increasing budget deficits each year. Government debt has jumped from NT$2.799 trillion in 1998 to a forecast NT$3.4 trillion this year. Debt accounts for 33 percent of the nation's GNP. To put it another way, if the government's debt was divided equally among the population, each citizen would be faced with a debt of NT$153,561 this year. This is far too heavy a burden to foist on the next generation from the moment they are born.
Given Taiwan's dire financial straits, if we are to eliminate the government's deficits we must increase government income and reduce its expenditure. It is not enough simply to limit spending on official banquets to NT$4,000 or NT$6,000 per table. It is more important to stress the need to restructure the central government and slash personnel costs. With tax time once again upon us, we would do well to consider whether our system of taxation is fair.
Taiwan, with its relatively low levels of taxation, has long experienced imbalances between tax revenues and public expenditure. Tax revenues constitute 13.3 percent of Taiwan's GDP. The figure for Japan is 16.4 percent, for the US it's 22 percent, the UK is 30.1 percent and for northern European countries it is over 40 percent. Taiwan's percentage would seem to be too low.
In addition, since military personnel and public-school teachers have long enjoyed exemptions from income tax and since industrial development requires tax breaks to stimulate investment, it would be extremely difficult to increase the revenues generated by taxation.
Indeed, tax revenues have shown negative growth in the past two years -- minus 6.7 percent in 2001 and minus 26.7 percent in 2002. If the government continues to refuse to raise taxes, central government debt will remain sky-high and the sources of taxation will continue to be in short supply. It will be only a matter of time before the government finances are as dry as the nation's reservoirs. It is to be hoped that, when Premier Yu Shyi-kun said that he hoped to revoke the tax-exempt status of teachers and military personnel next year, he did so out of concern for the above factors.
Fair taxation and a balance between government revenues and expenditure are the bedrock of a nation's finances. At last year's Economic Development Advisory Conference (
There is certainly plenty of room for reform in our tax system. In order to reduce the immense pressure of deficits and boost the nation's overall competitiveness, perhaps it is time for the authorities to untie the Gordian knot and adjust the tax structures. No one wants the next generation to bear a heavy debt. But where is the money to come from? The government must search its soul for an answer.
Yu Jan-daw is a DPP legislator.
Translated by Jackie Lin
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under