The Cabinet may claim to be a body of doctoral degree holders, but they are often incapable of explaining their ever-changing policies. This was true of the US beef import debacle and it applies both to an economic cooperation framework agreement (ECFA) with China and to the draft industrial renewal act that the legislature is about to vote on. On the eve of the vote, the Cabinet suddenly announced that it would cut the 20 percent business income tax rate in the draft to 17 percent. That cut will cost the government NT$30 billion (US$956 million) in lost tax revenue.
The draft industrial renewal act is intended as a replacement for the expired Act for Upgrading Industries (促進產業升級條例). It extends tax cuts and incentives that have made Taiwanese industry dependent on government subsidies. By cutting the business income tax from 20 percent to 17 percent in response to opposition calls for a 17.5 percent tax rate, the government is using fiscal revenue to feed industrial profit. By not reforming the regulations in the Act for Upgrading Industries, which distorted the tax system, the government will erode fiscal revenues by helping wealthy people earn more and pay less taxes. While certain to compound social injustice, the effects on industrial renewal are questionable.
Premier Wu Den-yih (吳敦義) has said the 17 percent tax rate was determined by looking at Singapore and that the cut is intended to increase Taiwan’s attractiveness to foreign investors. The difference is that while Singapore relies on the service industry for its growth, Taiwan’s specialty is manufacturing. The economic structures of the two countries are different and offer different advantages, which means that the conditions required for industrial development differ even more.
If the government wants to encourage industrial renewal to increase competitiveness by looking at Singapore, it is comparing apples and oranges. Taiwan needs to learn from Singapore how to improve efficiency and raise overall competitiveness. The nation needs to take a careful look at its own economic system and find development strategies appropriate to Taiwan, and the government and the opposition must stop competing by undercutting each other’s tax suggestions — that only serves to unload debt onto future generations. The government must also stop blindly pushing for an ECFA that will only encourage local industries to move to China.
Minister of Finance Lee Sush-der (李述德) had previously called the current 20 percent business income tax rate the final limit. He even said that “we can’t cut even 1 percent” off that figure, but after the Cabinet’s decision to cut 3 percent, Lee actually justified the change by saying: “It is only normal that policy keeps changing.” He then glossed over the loss of tax revenue by saying that “the economy will grow.”
If the nation’s finances are squandered on lavish policies because the government wants to save the current financial situation with the help of a hypothetical future economy, it is simply moving the economic crisis forward in time. The policy direction keeps changing without any attempt to explain or defend policy decisions or to take any responsibility for the nation’s future development.
We have now seen different scenarios play out over two of the Cabinet’s major policy initiatives: The draft industrial renewal act and the second generation of the national health insurance system. The behavior of Lee and Department of Health Minister Yaung Chih-liang (楊志良) differed vastly. Yaung defended his ideals and policies to the extent that he was willing to resign. Lee, on the other hand, quickly backed off when he encountered opposition, instead of defending his policies and showing the courage to face the consequences of his decisions. Once again, this shortsighted and unprincipled decision-making process reveals how the government is slowly self-destructing.
In the event of a war with China, Taiwan has some surprisingly tough defenses that could make it as difficult to tackle as a porcupine: A shoreline dotted with swamps, rocks and concrete barriers; conscription for all adult men; highways and airports that are built to double as hardened combat facilities. This porcupine has a soft underbelly, though, and the war in Iran is exposing it: energy. About 39,000 ships dock at Taiwan’s ports each year, more than the 30,000 that transit the Strait of Hormuz. About one-fifth of their inbound tonnage is coal, oil, refined fuels and liquefied natural gas (LNG),
On Monday, the day before Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) departed on her visit to China, the party released a promotional video titled “Only with peace can we ‘lie flat’” to highlight its desire to have peace across the Taiwan Strait. However, its use of the expression “lie flat” (tang ping, 躺平) drew sarcastic comments, with critics saying it sounded as if the party was “bowing down” to the Chinese Communist Party (CCP). Amid the controversy over the opposition parties blocking proposed defense budgets, Cheng departed for China after receiving an invitation from the CCP, with a meeting with
To counter the CCP’s escalating threats, Taiwan must build a national consensus and demonstrate the capability and the will to fight. The Chinese Communist Party (CCP) often leans on a seductive mantra to soften its threats, such as “Chinese do not kill Chinese.” The slogan is designed to frame territorial conquest (annexation) as a domestic family matter. A look at the historical ledger reveals a different truth. For the CCP, being labeled “family” has never been a guarantee of safety; it has been the primary prerequisite for state-sanctioned slaughter. From the forced starvation of 150,000 civilians at the Siege of Changchun
The two major opposition parties, the Chinese Nationalist Party (KMT) and the Taiwan People’s Party (TPP), jointly announced on Tuesday last week that former TPP lawmaker Chang Chi-kai (張啟楷) would be their joint candidate for Chiayi mayor, following polling conducted earlier this month. It is the first case of blue-white (KMT-TPP) cooperation in selecting a joint candidate under an agreement signed by their chairpersons last month. KMT and TPP supporters have blamed their 2024 presidential election loss on failing to decide on a joint candidate, which ended in a dramatic breakdown with participants pointing fingers, calling polls unfair, sobbing and walking
RSS