It was a slap in the Taiwanese government’s face when negotiations on a cross-strait mechanism to avoid double taxation broke down at the last minute on Monday.
However, it should be a precious lesson for President Ma Ying-jeou’s (馬英九) administration: Haste makes waste.
The delay is good news for the public and more than 1 million China-based Taiwanese businesspeople, who can now avoid the harmful consequences of a hastily signed pact. Nevertheless, the way the Ma administration handled the talks is worrying and raises more concerns about the planned economic cooperation framework agreement (ECFA).
Citing confidentiality, Minister of Finance Lee Sush-der (李述德) refused to specify what “unexpected technical issues” caused the negotiations to fail, saying only that they were related to tax items, tax rates and the definition of residence.
Aside from the tax rates, some of these “technical issues” are basic terms that should have been addressed in the first few negotiation sessions.
Lee should have known this better than anyone else. Why, then, did the ministry wait until the last minute and allow the “technical issues” to get in the way?
Meanwhile, Straits Exchange Foundation (SEF) Secretary-General Kao Koong-lian (高孔廉) offered the excuse that the two sides had only begun negotiations on double taxation in October, and that the issue remained complicated.
The government has signed bilateral tax exemption agreements with 16 countries since 1981, but the negotiations for each of those took between one and four years to complete, he said.
Again, Kao and Lee should have known this better than anyone else. So why did they believe they could wrap up a tax deal with China in less than three months when officials knew it would be far more complicated than the agreements Taiwan has signed with 16 other countries?
What’s the hurry?
None of these questions will be answered since Lee made it clear that “he cannot reveal too much information” because the two governments are still in the process of negotiating.
This raises another question: Why the secrecy?
This secrecy is not in line with how Taiwan has handled previous tax proposals.
In the past, Taiwan included the private sector in the policymaking process by creating a tax reform committee, whose authority often transcended that of the finance ministry.
The committee reviewed many versions of tax rate proposals and the media accordingly informed the public. The proposals were thoroughly discussed before the committee and the government sought a consensus. After all, a balance must be struck between the government and the taxpayer.
This time around, however, the finance ministry is keeping the public in the dark, trying to single-handedly pull off a deal with China.
This will only end up triggering more opposition, not only to a taxation agreement with China, but also to other agreements such as an ECFA.
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