These and other items added up to a total of NT$15.7 trillion.
The Control Yuan’s report noted that this debt represented 115 percent of GDP and that if the aforementioned non-self-redeeming central government debt with maturity of one year and above were added to this sum, it would add up to a grand total of NT$20 trillion, which is 150 percent of the nation’s GDP.
In addition, total debts borne by city, county and township governments totaled more than NT$800 billion as of last year.
The only thing worth celebrating is that the nation has no external debt impacting upon its economy.
A few days ago the Ministry of Finance published tax revenue figures for last year, revealing that the net total of actually collected taxes came to a record high NT$1.7793 trillion.
However, the shortfall in tax revenue for the year was in excess of NT$24.4 billion, principally because of a NT$55 billion shortfall in securities transactions tax collection.
This is the first time since the global financial crisis of 2009 that there has been a shortfall in tax revenues.
If the factor of price increases and that the consumer price index last year rose by 1.93 percent is taken into consideration, Taiwan’s real tax revenue last year fell by NT$1.7646 trillion compared with the year before.
In 2011 the US’ Democratic and Republican parties approved an automatic deficit-reduction mechanism that has helped restrain the US’ worsening fiscal deficit.
Recently the government has proposed amendments to the Public Debt Act, but it should reinforce two aspects of the regulations: advance-warning mechanisms and fiscal discipline.
To be specific, it will be imperative to establish advance warnings regarding the flow of borrowing by central and local government and to keep them under control.
If the flow of borrowing exceeds the alarm threshold for two years in a row, further amounts should only be borrowed if a two-thirds majority of legislators or councilors agree to it.
Taiwan may not become a second Greece, but the fact remains that our fiscal situation keeps getting worse. If we fail to tighten up the system, we are likely to face a Taiwanese version of a “fiscal cliff.”
Lee Wo-chiang is a professor in the Department of Banking and Finance at Tamkang University.
Translated by Julian Clegg