Mon, May 01, 2017 - Page 6 News List

The Liberty Times Editorial: Youth policies need greater priority

Two important bills have passed their third readings in the legislature. One was an amendment to the Tobacco and Alcohol Tax Act (菸酒稅法), passed on April 20, and the other was an amendment to the Estate and Gift Tax Act (遺產及贈與稅法), which was passed on Tuesday. These two amendments have the same purpose: to secure financing for Taiwan’s long-term care services.

The Democratic Progressive Party (DPP) has exerted a great deal of effort in pushing the amendments and those aged 60 and older are certain to feel the benefits. However, looking at what kind of policies should be made a priority in terms of national development, this is policy for older people and it is less urgent than coming up with policies for the young.

The two amendments originated with changes to the Long-Term Care Services Act (長期照顧服務法) passed last year, according to which long-term care should be financed by the tobacco, estate and gift taxes.

The amendment to the Tobacco and Alcohol Tax Act adds NT$20 (US$0.66) to the tax on every pack of cigarettes, which will now total NT$31.8 per pack. According to the government’s calculations, this will contribute NT$23.346 billion to long-term care every year.

The amendment to the Estate and Gift Tax Act changes the tax rate from a flat 10 percent to a three-tiered incremental tax of 10, 15 and 20 percent. The government estimates that this would contribute NT$6.3 billion to long-term care per year.

Two legislative sessions have passed since the DPP government took office and since these are the bills it has focused on, it is clear that they constitute its main policy focus.

The increase in the tobacco tax is aimed at public health issues such as tobacco hazard prevention, something most people can agree with.

However, the estate and gift tax adjustments set off a wave of calls to reduce taxes, after the government’s policy direction became clear last year. The calls have extended to calls for adjustment to the taxes on cash, shares, real estate and insurance.

Since neither Singapore nor Hong Kong or the rest of China have an estate tax, there have even been examples of wealthy people voting with their feet to protect their property. Experience bears this out: After the estate tax was cut to 10 percent in 2009, the government’s fiscal revenue remained about the same as it was before the amendment, when the tax stood at 50 percent.

In other words, this source of fiscal revenue is unstable and it is questionable if the Ministry of Finance’s estimates will be met. It will be necessary to pay attention to the effect this will have on capital.

However, these issues are not the point of this editorial. Considering Taiwan’s problems, more attention should be given to policies aimed at the young instead of focusing on the elderly. At the very least, the two groups should be given the same weight.

If priority is given to policies for the elderly, that could remove all room for policies for young people. That would be a great mistake.

The danger posed to Taiwan by a falling birth rate and an aging population is common knowledge. Let us leave aside immigration policies for the moment and focus on these two issues alone.

We cannot stop people from growing old or reduce the number of elderly people, so if we are to change the demographic structure, there is only one way to go: encouraging families to have children.

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