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.
To increase people’s willingness to have children, the government has touted its long-term care policy, saying that it would help women find work, give birth and bring up children without concern for their age.
The blind spot with this reasoning is that between the ages of 20 and 40, very few people have parents that need long-term care support, and so low salaries, lack of daycare and workplace discrimination would be far bigger obstacles to the willingness to have children.
A survey by the Directorate-General of Budget, Accounting and Statistics from 2013 shows that the main factors that made women between 25 and 49 more willing to marry were stable employment and income — 39.97 percent — and gender equality in the workplace — 13.73 percent. Added together, these two factors exceed 50 percent, proving the point.
The government should focus its efforts on the most urgent problems, but instead it is prioritizing secondary issues that bear at most an indirect relationship to these problems.
In addition to the importance of the elderly vote, it is likely that because most of these decisionmakers are in their 50s or 60s or older, long-term care — be it for their parents, who will be in their 70s or 80s, or for themselves — is a concern that they can identify with.
This mindset seems to be why policies aimed at the elderly are consistently pushed to the top of the legislative agenda, crowding out policies aimed at the young.
There is nothing wrong with promoting policies for older people — all Taiwanese are entitled to use the National Health Insurance — but elderly care is a calling, not an emerging industry.
Most people appear unwilling to understand that, unless long-term care policy is complemented with measures for younger people, the willingness to have children that could support elderly people could further drop and there is a risk that it would be seen as the natural thing to do to send one’s parents to a nursery home as soon as they reach a certain age, changing traditions of filial piety.
Even more worrying is that it appears childcare policy reform might be put on the back burner, which would further intensify the already sharp drop in the birthrate.
The government needs to do a lot more to come up with more balanced policies.
Translated by Perry Svensson
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