Security tax idea again under fire

Cabinet spokeswoman Chun Chin (鍾琴) yesterday revived the idea of a "national security" tax (國家安全捐) on Taiwanese investment in China.

The idea of such a tax was first proposed last month by the new vice governor of the central bank, Chen Shih-meng (陳師孟), but was derided by former Cabinet officials and non-DPP politicians as "proposing an exercise, which can only be suitable in a classroom" as well as "setting up more obstacles with an anti-China ideology."

Chun, director of the Government Information Office and also a senior research fellow on cross-strait economic issues at the Chung Hua Institution for Economic Research, defended Chen's idea as being "the mainstream of academic opinion."

Chun said such a measure may be adopted as government policy for regulating a new cross-strait trade relationship.

Chun stressed that the previous government's "no haste, be patient" (戒急用忍) policy had not worked well and that the enforcement of investment restrictions had not been effective.

"Chen's [security tax] idea is more compatible with economic liberalization than the old policy," Chun said. "His goal is that the government can directly control such investment by its costs, thereby solving the problem of external costs [which include such expenditures as Taiwan's national defense budget]."

Chun stressed that the security tax had not been discussed by the Cabinet.

"However, this does not mean that the government will exclude this measure," she said.

Chen, formerly a Taiwan University professor, suggested on May 10 that a national security duty could be implemented if direct transportation and trade links were established.

In justifying the proposal, Chen said Taiwanese investment in China could pose a threat to national security, and that businesses operating there should contribute to the nation's defense budget.

In addition, Chen said the new administration could levy a tax on cross-strait freight. The funds would be used for local construction projects and also for national security purposes.

Responding to a reporter's question about the proposed tax, Chun yesterday supported Chen saying that such a tax could also deliver the message that "Taiwan is an independent, sovereignty country."

"The name of this tax could be changed, if it caused a negative reaction," Chun added.

Chun also said that the tax would serve an economic purpose beyond subsidizing Taiwan's defense budget, in that it would help drive out weaker companies.

"In the past, the investments were regulated on the basis of their scale and type, but now through this tax, the government will use the concept of `price control' (價格管制)," Chun said.

"Businessmen should not be worried about this tax, all they need to do is to promote their [companies'] efficiency."

Chun admitted, however, that levying such a tax might be seen as violating the principle of "anti-discrimination" and other regulations to enter the WTO.

"But we can explain to the international community that the cross-strait relationship is not totally normalized," Chun said.

Chun's statement yesterday brought a swift, negative response from many quarters.

"This tax can neither increase government tax revenues nor improve the cross-strait relationship," said KMT legislative caucus leader Lin Chien-jung (林建榮).

"Taiwan's businessmen have suffered in the bad investment environment in China, and now they have to be exploited by our government for purely political considerations," said PFP legislative caucus leader Chiu Chuang-liang (邱創良).