Sat, Apr 03, 2010 - Page 8 News List

EDITORIAL : More incentives needed for the poor

While most households living below the poverty line are hoping the government will expand its disbursement of subsistence allowances, they are expecting this from a deficit-ridden government that is under strain in boosting social welfare spending.

The irony is that this government appeared to accommodate the public by cutting both personal and business income taxes as well as trimming inheritance and gift taxes last year.

In January, the Ministry of the Interior (MOI) completed the drafting of an amendment to the Social Assistance Act (社會救助法) that aims to find a way to redefine the poverty line (or the minimum cost of living) and expand the number of households covered by government subsidies.

However, Premier Wu Den-yih (吳敦義) on Thursday returned the proposed amendment to the MOI. He instructed the ministry to conduct further discussions with local governments about the amendment’s possible impact on their finances, before submitting an updated draft to the Cabinet for review in two weeks. The ministry estimated the expanded subsidies would cost both the central and local governments an additional NT$3.33 billion (US$105 million) on top of the current NT$8.5 billion price tag.

Even so, it seems likely that the poverty line threshold will be revised and the scope of subsidies expanded to address the gradual increase in the number of low-income families over the past few years.

As of the end of last year, 249,834 people, or 1.08 percent of the population, were considered to be living beneath the government-defined poverty line, which means their incomes were below the minimum cost of living for the city in which they lived.

The government calculated the minimum cost of living per person per month at NT$14,558 in Taipei City last year, NT$10,792 in Taipei County, NT$11,309 in Kaohsiung City and NT$9,829 in all other municipalities. The number was even lower for Kinmen and Matsu, at NT$7,400 per month.

The MOI said the proposed amendment would provide monthly subsistence allowances as well as subsidies for health insurance premiums, national pension premiums and tuition fees to 240,000 more people. Overall, nearly 500,000 mid and low-income people would receive financial aid from the government once the amendment clears the legislature.

No one would doubt the official poverty rate of 1.08 percent is impressive compared with that of many other countries, but does this rate reflect a true picture of poverty in Taiwan? A quick answer is no, because a significant number of people are not eligible for government assistance under the current definition. They don’t qualify for such benefits because of the government’s strict criteria, which include the level of household income and the ownership of personal assets and real estate.

Nevertheless, the move to redraw the poverty line reflects concern about economically disadvantaged people’s persistently low wages in the labor market and their unremitting lack of jobs — a situation that keeps them trapped in a vicious cycle of poverty.

Although the government might be concerned that some people would exploit the welfare system by relying on subsidies while not looking for work, these people represent only a small proportion of those who are poor.

What the government should try to understand is that while Taiwan’s unemployment rate may have fallen from its peak, new jobs are not created for low-income people in an equally meaningful sense as they are for the rest of the population, as far as competitiveness is concerned. Therefore, in addition to revising the poverty line, more incentives to low-income people to pursue vocational training or further education would be a key factor in enhancing their future standard of living and quality of life.

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