The deteriorating national debt situation could eventually harm the nation's competitiveness if the situation is not remedied, Minister of Finance Lin Chuan (
"We have seen a less than ideal national financial situation for years ? since the economic bubble burst in the 1990s," Lin said in a speech yesterday at a ceremony to mark the 20th anniversary of the Chinese-language business magazine Excellence Monthly.
The nation is more than NT$3 trillion in debt, according to statistics provided by the Directorate General of Budget, Accounting and Statistics.
The growing debt will affect the rating of the government, eat into the country's social capital and savings, and ultimately hurt national competitiveness, Lin warned.
The recession triggered by the bursting of the economic bubble happened more than 10 years ago, and along with tax remissions, has caused a decline in tax revenues, which in turn led to an imbalance in national financing, Lin said.
The amount of cumulative debt went from NT$600 billion in 1990 to soar to NT$2.6 trillion in 2000 and is expected to reach NT$3.9 trillion by the end of this year, Lin said, citing figures compiled by his ministry.
The only way to remedy the situation is to reduce government spending or increase revenues, Lin said.
The ratio of government's aggregate spending to gross national product (GNP) has not increased, while the ratio of revenue to GNP declined in the past 10 years, he said. Increasing revenue would be the most effective way of getting the government out of the red, Lin said, although he did not elaborate on how to achieve this.
Last month, Lin told reporters that the finance ministry had not discussed introducing a capital-gains tax on stocks. He made the remark after other ministry officials had said the ministry had not ruled out suggesting such a move.
Lin noted that in a bid to improve efficiency and cost-benefits in government spending, the budget distribution mechanism for local governments and central government agencies was changed in recent years, requiring organizations to be responsible for ensuring their spending remained within their budget limitations, Lin said.
The minister said he hoped a bill governing the allocations of government revenue and expenditures (
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