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Irate DPP legislator attacks subsidies for high-tech firms

The government's NT$50 billion (US$1.6 billion) annual subsidy for the high-tech sector only leads to laziness and is ineffective in upgrading the industry, a Democratic Progressive Party (DPP) lawmaker said yesterday.

"If the local high-tech industry continues to manufacture for other countries rather than focus on research and development, it is doomed in a highly competitive market," DPP Legislator Lin Wei-chou (林為洲) told a press conference yesterday.

Lin said the high-tech industry pays an average 8 percent in income tax as the result of a preferential tax policy, while counterparts in the US pay 25 percent and those in Korea between 20 and 35 percent.

Lin claimed that the government has collected about NT$50 billion less in tax revenue since introducing the Statute for Upgrading Industries (促進產業升級條例).

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

Lin last week alleged that United Microelectronics Corp (UMC) and Taiwan Semiconductor Manufacturing Co (TSMC) receive tax treatment so generous that their after-tax earnings since 1997 have exceeded their pre-tax earnings by about NT$3 billion.

In addition to collecting less tax from the high-tech industry, Lin said that the government spends outrageous amounts of money supporting the industry in the hope of upgrading their research and development capacity.

While Taiwan's government shouldered about 35 percent of high-tech industry research and development spending in 2002, Lin said that the US government carried about 30 percent and the Japanese government 19 percent.

With such generous government assistance, patented items invented by and registered under the name of local high-tech companies accounted for a mere 0.18 percent of the world total, Lin said.

"It sounds like a far-fetched fantasy to upgrade the industry's competitiveness if it takes advantage of government subsidies but slacks off in research and development," he said.
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