Tue, Jan 13, 2009 - Page 8 News List

THE LIBERTY TIMES EDITORIAL: Preferential interest rates must go

With the three-year floating postal savings interest rate dropping to 1.575 percent, the nation moved a step closer to zero interest rates.

Taiwan is about to witness another miracle ­— the lower rates will not have the slightest impact on 400,000 retired military personnel, civil servants and public school teachers who all enjoy an 18 percent preferential interest rate on their retirement funds.

This may be an old issue, but it is still certain to make the nation’s millions of laborers angry at being treated as second-class citizens. Maybe even the military personnel, civil servants and teachers will feel unease at being included in an unjust system.

There is of course a reason for the preferential interest rate. In the past, salaries for military personnel, civil servants and teachers were low and the economic environment at the time led the government to encourage saving to accumulate capital for industrial development.

Today, salaries of military personnel, civil servants and teachers have increased substantially, while the conditions for retirement are now vastly different, which means there is no longer a need for the government to care for them the same way it did in the past. Banks now also have sufficient capital. Given this situation, system reform based on a concern for the national finances, fairness and justice becomes necessary.

The government must of course take an all-encompassing view of this situation and make comprehensive adjustments that consider both fairness and equality, so that the gap between the welfare of civil servants and other members of the public does not become too wide.

We have no intention of criticizing retired government employees who receive the preferential rate. In the past, this scheme was necessary, but today, 25 years later, it remains unchanged and requires thorough reform.

Moreover, primary and secondary school teachers and military personnel don’t have to pay taxes. This practice has been discussed for years, both by the legislature and the general public, but no conclusion has been reached. As in the case of the 18 percent interest rate, the government does not want to offend civil servants. The Chinese Nationalist Party (KMT) has taken good care of them, and by comparison, the welfare of laborers, farmers, Aborigines and other disadvantaged groups has been neglected, with some having difficulty making ends meet.

It is precisely these groups that have to bear the brunt as the global economic slowdown hits Taiwan.

If President Ma Ying-jeou (馬英九) really cares about the general public, he should direct all efforts toward reform of these unreasonable and outdated systems so that government resources are spent on those who need it.

Over the past eight years, the government’s reform of welfare measures was repeatedly obstructed by the KMT’s legislative majority. Today, Ma and the KMT enjoy absolute power with more than two-thirds of all legislative seats and reform would be as easy as pie.

Statistics show that the government will spend almost NT$80 billion (US$2.4 billion) on the 18 percent preferential interest rate this year, or as much as the consumer voucher scheme. This shows the unreasonable distribution of public welfare. The government’s attentiveness to retired military personnel, civil servants and teachers must be adjusted with the times. It must not remain unchanged and give rise to irregularities, of which the 18 percent preferential interest rate is one.

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