Even worse, the government is now pretending to carry out reform while actually making people’s lives even harder by increasing fuel and electricity prices, which will cause everything to go up in price.
In addition, the massive losses incurred by CPC Corp, Taiwan and Taiwan Power Co could be linked to inappropriate budget allocations, poor management and even illegal activities. There have been many reports about these problems and people are waiting for the Judicial Yuan and the Control Yuan to investigate. However, they have done nothing and Ma has made matters worse by hitting the public with price hikes.
When it comes to reform, both timing and method are important. While nobody would oppose the spirit behind the reintroduction of the capital gains tax — that anyone who makes money should be taxed — ignoring the overall economic environment and public hardship means reform could well be ineffectual. Frankly, there are practical problems involved in levying such a tax. When former minister of finance Shirley Kuo (郭婉容) first introduced the securities tax 24 years ago, the TAIEX dropped sharply for 19 consecutive days, and in the end the tax was scrapped after only one year when it had brought in just a few dozen billion in revenue.
There are many individual investors in the Taiwanese stock market and most of them are engaged in short-term trading. For them, declaring their securities income would be a major undertaking, and given that the Ministry of Finance forecasts that tax revenue may only be about NT$10 billion (US$338.5 million), the question is if such a tax makes economic sense.
In the past, a securities transaction tax has been used instead of a capital gains tax, with good results. The government collected hundreds of billions of NT dollars annually from the transaction tax, which is approximately 8 percent to 10 percent of annual fiscal revenue and very helpful to the nation’s finances. This form of revenue has been very steady for many years, so why does the government want to bring back a capital gains tax in the name of fairness when it will only cause turbulence and panic in the market?
Ma’s recent actions have greatly angered Taiwanese, but he is showing no signs of stopping. The reason for this is simple: The country’s leaders lack the ability to lead and do not know how to revive the economy. All they are good at is using big words like “reform” to make them look better and divert attention from their problems. They probably never thought that these reforms would backfire on them by almost destroying Taiwan’s economy and the government’s reputation.
The government’s policy decisions have put Taiwan in dire straits, making life almost unbearable for the average citizen.
Translated by Drew Cameron
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