The Ministry of Finance yesterday unveiled a medium and long-term financial improvement program that aims to reduce government outlays and generate tax revenues worth NT$1 trillion (US$30.9 billion) over eight years.
The program, including 10 major measures, is expected to raise tax revenues by NT$355 billion, cut expenditures by NT$295 billion and generate an extra NT$360 billion in income through better management of national assets, Minister of Finance Lee Sush-der (李述德) told a media briefing.
“If all proceeds smoothly, the program may yield an average of NT$125 billion a year between 2009 and 2016,” Lee said. “The estimate has yet to factor in potential economic growth and the multiplier effect.”
Lee conceded the nation’s finances are deteriorating with government debt hitting NT$3.88 trillion last month — 32.21 percent of GDP. The figure is expected to climb closer to the 40 percent ceiling next year as the government has to borrow more to rebuild areas hit by Typhoon Morakot.
“Government debt rose by NT$222.5 billion between May last year and this year,” Lee said, adding that the budgetary shortfall this year is estimated at between NT$140 billion and NT$150 billion on slumping tax revenues.
To improve the situation, the ministry plans to set the tax burden at 14.3 percent of GDP, national land utilization rates for non-public use at upward of 50 percent and debt principal reduction at more than 5 percent of yearly tax revenues.
“The nation’s tax burden, which sank to a record low of 11.9 percent in both 2002 and 2003, is relatively low compared with Japan, South Korea and the United States” where the burden exceeds 20 percent, Lee said.
Further, the minister said he intended to hike business taxes from the current 5 percent to 6 percent in 2013. The planned tax hike does not require approval from the legislature.
Lee said he would seek to release shares in national enterprises and companies with a government stake although previous attempts met with resistance from lawmakers and union workers.
“I think inadequate communication and transparency rendered past efforts controversial,” the minister said. “I will try to avoid that.”
The government controls more than 88 billion shares in different companies with an aggregate value of about NT$2.93 trillion in different firms, the ministry’s data showed. With better management, those shares can generate NT$167 billion while national assets can bring in another NT$189.5 billion, Lee said.
On cutting expenses, the minister said he would advise the Ministry of Foreign Affairs to buy properties rather than rent representative offices abroad.
Lee said there were many other measures that could be taken to improve the state coffers if all government agencies joined the effort.
AI BOOST: Although Taiwan’s reliance on Chinese rare earth elements is limited, it could face indirect impacts from supply issues and price volatility, an economist said DBS Bank Ltd (星展銀行) has sharply raised its forecast for Taiwan’s economic growth this year to 5.6 percent, citing stronger-than-expected exports and investment linked to artificial intelligence (AI), as it said that the current momentum could peak soon. The acceleration of the global AI race has fueled a surge in Taiwan’s AI-related capital spending and exports of information and communications technology (ICT) products, which have been key drivers of growth this year. “We have revised our GDP forecast for Taiwan upward to 5.6 percent from 4 percent, an upgrade that mainly reflects stronger-than-expected AI-related exports and investment in the third
Mercuries Life Insurance Co (三商美邦人壽) shares surged to a seven-month high this week after local media reported that E.Sun Financial Holding Co (玉山金控) had outbid CTBC Financial Holding Co (中信金控) in the financially strained insurer’s ongoing sale process. Shares of the mid-sized life insurer climbed 5.8 percent this week to NT$6.72, extending a nearly 18 percent rally over the past month, as investors bet on the likelihood of an impending takeover. The final round of bidding closed on Thursday, marking a critical step in the 32-year-old insurer’s search for a buyer after years of struggling to meet capital adequacy requirements. Local media reports
TECHNOLOGICAL RIVALRY: The artificial intelligence chip competition among multiple players would likely intensify over the next two years, a Quanta official said Quanta Computer Inc (廣達), which makes servers and laptops on a contract basis, yesterday said its shipments of artificial intelligence (AI) servers powered by Nvidia Corp’s GB300 chips have increased steadily since last month, should surpass those of the GB200 models this quarter. The production of GB300 servers has gone much more smoothly than that of the GB200, with shipments projected to increase sharply next month, Quanta executive vice president Mike Yang (楊麒令) said on the sidelines of a technology forum in Taipei. While orders for GB200 servers gradually decrease, the production transition between the two server models has been
ASE Technology Holding Co (日月光投控), the world’s largest integrated circuit (IC) packaging and testing supplier, yesterday announced a strategic collaboration with Analog Devices Inc (ADI), coupled with the signing of a binding memorandum of understanding. Under the agreement, ASE intends to purchase 100 percent shares of Analog Devices Sdn Bhd and acquire its manufacturing facility in Penang, Malaysia, a press release showed. The ADI Penang facility is located in the prime industrial hub of Bayan Lepas, with an area of over 680,000 square feet, it said. In addition, the two sides intend to enter into a long-term supply agreement for ASE to
RSS