Tue, Feb 22, 2005 - Page 3 News List

Pan-greens slam preferential tax policies

LAX REGULATIONS The lawmakers said that due to the government's too-generous policies, two leading contract chipmakers actually saw their total profits increase

By Ko Shu-ling  /  REPORTER

DPP Lawmaker Lin Wei-chou denounces the high after-tax profits obtained by major chip makers like UMC and TSMC due to preferential tax schemes.

PHOTO: CHEN TSE-MING, TAIPEI TIMES

United Microelectronics Corp (UMC, 聯電) and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) receive such generous tax treatment that their after-tax earnings since 1997 were actually about NT$3 billion more than their pre-tax earnings, Democratic Progressive Party (DPP) lawmakers charged yesterday.

"While the government is suffering from financial difficulties, high-tech companies spend NT$2 million or NT$5 million to hold year-end banquets and give out tens of millions in prize money," said Democratic Progressive Party (DPP) lawmaker Lin Wei-chou (林為洲).

According to Lin, the government collects a total of NT$50 billion less in tax revenues through implementing the Statute for Upgrading Industries (促進產業升級條例).

That legislation provides industry-preferential taxation to stimulate investment, as well as incentives to boost the nation's service industries.

Focusing on UMC as an example, Lin said the company was supposed to pay NT$30.2 billion in tax from 1997 to the third quarter of last year, but actually ended up receiving an extra NT$2.8 billion because of the decree. In other words, the company's net after-tax revenue was about NT$2.8 billion more than its net before-tax revenue over the past eight years.

During the same period, while TSMC was supposed to pay about NT$68 billion in income tax, it actually received NT$85.7 million extra because of the statute. In other words, the company's net after-tax revenue was about NT$85.7 million more than its net before-tax revenue.

Together, the government would have collected NT$3 billion more in income tax from the two companies over the past eight years, if they had paid the same tax as the traditional industries.

Unlike the high-tech industry, Lin said, such traditional industries as the China Steel Corp (中鋼), the nation's largest steelmaker, paid more than NT$20 billion in tax over the past eight years. President Chain Store Corp (統一超商) paid around NT$500 million.

Lin called on the government to amend the statute, and said that his caucus will propose a revised version during the upcoming legislative session.

"While we support the idea of upgrading the nation's industries, we think that lucrative industries such as semiconductor or electronics should contribute more in taxes," he said.

Taiwan Solidarity Union (TSU) caucus whip Mark Ho (何敏豪) said that his caucus would strive to enact a technology protection law to protect sensitive technology and skills.

Ho also called on the government to reconsider further relaxing rules on China-bound investment.

"We think it will be cowardly and spineless if the government decides to further liberalize its policy on China-bound investment before the UMC case is thoroughly investigated and settled," he said. "It is only fair to make lawbreakers pay for their wrongdoings."

Ho and David Huang (黃適卓), as well as other TSU lawmakers, also visited Minister of Justice Morley Shih (施茂林) yesterday afternoon, asking Shih to continue the ministry's pursuit of the case and resist pressure and political interference.

Shih stressed that there was no political meddling in the case whatsoever and that the case was purely a legal one, rather than political.

The People First Party (PFP) caucus held a round-table meeting yesterday morning to discuss the issue with government officials and industry representatives.

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