The relocation of the headquarters of 14 petroleum-based industries to Kaohsiung is a step forward to achieve justice for city residents, the Kaohsiung City Government said on Monday, adding that the move would generate about NT$2 billion (US$62 million) in annual municipal tax revenue.
The city government last year delivered an ultimatum to petroleum companies by passing the Self-government Ordinance for Managing Existing Industrial Pipelines in Kaohsiung City (高雄市既有工業管線管理自治條例), saying that it would deny companies access to industrial pipelines if they do not relocate their headquarters to a registered Kaohsiung address by the end of the year.
Kaohsiung Economic Development Bureau said that as of this month, 76 industrial pipelines in Kaohsiung — spanning 977km — are owned by 14 companies.
LCY Chemical Corp (李長榮化工), Grand Pacific Petrochemical Corp (國喬石化) and Formosa Plastics Corp (台塑企業) have relocated their headquarters to Kaohsiung, while other companies are expecting their respective boards to pass relocation decisions, the department said, adding that CPC Corp, Taiwan’s (CPC, 台灣中油) decision meant that all 14 companies would relocate to Kaohsiung.
The city government praised President Tsai Ing-wen’s (蔡英文) administration for making the “correct choice,” referring to the Ministry of Economic Affairs’ decision to relocate CPC’s headquarters to Kaohsiung.
CPC is a state-run company that is under the jurisdiction of the ministry.
There is a gap between the allocation of centrally-funded tax revenues between Taipei and Kaohsiung — NT$12.9 trillion and NT$4.3 trillion respectively — but once the 14 companies have relocated to Kaohsiung, the city’s tax income is expected to increase by about NT$1.4 trillion, with CPC making up about NT$1 trillion of that figure, the bureau said.
According to estimates by the city government, 50 percent of the Regulations for Allocation of Centrally-Funded Tax Revenues (中央統籌分配款分配辦法) is determined by a municipality’s revenue, 20 percent by its population, another 20 percent by its land and 10 percent is determined by the municipality’s financial capabilities.
The act is the basis for the central government to allocate a percentage of national income to municipalities and townships for balanced regional growth, the bureau said.
Kaohsiung is looking at an increase of about NT$2 billion in reciprocated tax revenue, it added.
The source of tax for the reciprocated tax revenues are sales tax and business tax, Ministry of Finance officials said, adding that the higher the local corporate sales are, the more the municipal government will receive from the reciprocated tax revenue.
However, sales revenue for a company’s each location is calculated separately according to their respective cities and not combined under the headquarters of the corporation, the ministry said, adding that the impact on tax income based on the location of the corporation’s headquarters is minimal.
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