The pro-China stance has caused an outflow of Taiwanese capital, companies, human resources and technology to China, leaving businesses in Taiwan unable to upgrade and transform, instead sticking to the contract manufacturing model, salaries falling near the levels of Chinese workers and employment plunging.
Despite this, Ma continues to view China as the solution to the nation’s problems and pins all his hopes for an economic revival on the Chinese market. This style of governance is like speeding up when heading for a collision and refusing to change course.
The Ma administration is filled with academics who like to talk about theory and ethics, while ignoring the real world in their pursuit of fame and glory. The capital gains tax is an excellent example of this attitude. While the revival of this tax may allow Ma to go down in history for tax fairness, it has weighed heavily on the nation’s already weak stock market. It has scared off retail and institutional investors, and caused trading volume to drop sharply.
Last year, revenue from the securities transaction tax dropped by between NT$40 billion and NT$50 billion (US$1.34 billion and US$1.68 billion). With the stock market faltering, it has yet to reach the 8,500-point level where the capital gains tax will kick in, which means that it might not bring in a single New Taiwan dollar in government revenue this year.
The Control Yuan has reprimanded the Ministry of Finance for the tax, saying the policy has caused the TAIEX to lose NT$2 trillion in value, public wealth to shrink sharply and domestic capital to flow out of the country. Last year, the net outflow of capital reached a record-high US$45.3 billion, leading a Control Yuan member to say: “Erroneous policies are even more frightening than corruption.”
This is a typical example of how the government works against the public.
After decades of effort, Taiwan possesses solid economic fundamentals. Although the economy looks bleak, it is not too late to take action. Unfortunately, the government is not even aware that a crisis is looming. It remains smitten with itself and does as it pleases, which repeatedly puts it at odds with the public. It even takes pride in its daring to do so, and this is creating disaster and causing the economy to collapse.
Protected by the high threshold for a presidential recall, the man who sits asleep at the wheel is likely to remain there for another three-and-a-half years, and that is tragedy for Taiwan and its people.
Translated by Perry Svensson