The failure of President Ma Ying-jeou’s (馬英九) administration to increase tax revenues, while proposing to revitalize or privatize national assets, will hurt the government’s finances, a lawmaker said yesterday.
“The national debt for next year — the annual financial deficit of NT$209.9 billion [US$7 billion] plus the debt payment of NT$64 billion — would likely reach 38.6 percent of gross domestic product, only 2 percent shy of the maximum of 40.6 percent as stipulated by the Public Debt Act (公共債務法),” Taiwan Solidarity Union (TSU) Legislator Hsu Chung-hsin (許忠信) told a press conference.
Hsu said a series of policies have decreased the tax base and revenues, which are already among the lowest in advanced democracies.
For example, Ma’s administration has cut the corporate tax rate while touting “free economic pilot zones,” which are unlikely to bring in a lot of revenue. It also plans to sell government-held stocks and privatize the Aerospace Industrial Development Corp, one of the most profitable state-owned enterprises, by the end of next year, Hsu said.
The administration was trying to make up for lost tax revenue by generating “pocket money” from other areas, such as the Ministry of Finance’s increasing dependence on superficies creation — the rental of state property to private developers for a set period, usually about 50 years — he said.
Hsu cited ministry statistics as saying that the government earned NT$2.08 billion from superficies in 2011, NT$3.07 billion last year and NT$2.84 billion so far this year as of last month.
“In my opinion, superficies should be considered a different form of selling, even if they come with a time limit,” Hsu said.
The administration’s failure to maintain healthy government finances could make Taiwan more vulnerable to economic absorption by China, he said.
Asked for a response, National Property Administration Deputy Director-General Pian Tzu-shu (邊子樹) said the finance ministry used superficies because they bring in revenue in the form of rents and rights fees, adding that the law prohibits the government from selling plots of national land greater than 500 ping (1,653m2).
“The creation of superficies is by far the most effective way to generate maximum profit without selling off land,” Pian said.