The nation will see a 3.8 percent retraction in the scale of government spending next year because of an expected decrease of 7.3 percent in annual tax revenues this year, Minister of the Directorate-General of Budget, Accounting and Statistics (DGBAS) Shih Su-mei (石素梅) said yesterday.
Shih made the remarks after the Cabinet drew up a preliminary budget statement for next year at a meeting called by Premier Liu Chao-shiuan (劉兆玄), which was attended by senior officials.
Under the proposal, the annual revenue for next year’s central government budget was projected at NT$1.55 trillion (US$47 billion), a decrease of NT$121.9 billion, or 7.3 percent, from this year.
Because of the expected decline in annual revenues, coming mainly from a decrease of NT$149.9 billion in tax revenues this year, the scale of government spending for next year was cut accordingly to NT$1.74 trillion, a drop of 3.8 percent.
Shih said that he expected tax revenue for next year to return to the 2007 level, adding that negative growth in government spending next year was the first time this has happened since 2007.
To meet a shortage of NT$189.1 billion in the budget statement and raise NT$66 billion to pay off the principle on government debt as well as next year’s special budget of NT$192.2 billion — part of the project to expand infrastructure construction to boost the economy — Shih said that the government would take out a loan for more than NT$460 billion next year.
Government debt is expected to reach NT$4.5 trillion by the end of next year, an increase of NT$240 billion from this year, Shih said.
Shih said that the NT$460 billion loan, 14.7 percent of next year’s budget, was “relatively high,” but it was still below the ceiling for public debt set out in the Public Debt Act (公共債務法).
The estimated debt of NT$4.5 trillion would account for 35.8 percent of the average GNP for the previous three years, also below the ceiling of 40 percent set by the Act, Shih said.
“Despite negative growth in expenditures on economic development, the overall growth in government spending to boost the economy next year will amount to NT$526.8 billion, an increase of NT$24.4 billion, or 4.9 percent, from this year, if the funds in the special budget are included,” Shih said.