The difference between the government’s GDP projection and the nation’s real economic performance accounts for a tax surplus from last year, finance officials told lawmakers yesterday.
The comments came after people questioned the legitimacy of tax surpluses from the past two years, as the government has said it would use part of a NT$450 billion (US$14.74 billion) tax surplus to distribute cash payments of NT$6,000 next month.
Directorate-General of Budget, Accounting and Statistics (DGBAS) Minister Chu Tzer-ming (朱澤民) said that the agency in August 2020 forecast GDP growth of 3.92 percent for 2021, but the real growth approached 6.5 percent, thanks to strong demand for electronic devices used in remote work and education.
Photo: CNA
Manufacturing sectors and individuals gained much higher incomes than expected, which inflated state coffers, Chu said.
DGBAS officials normally prepare fiscal budgets up to two years in advance based on data from recent years, and were therefore unable to account for the economic effects of the COVID-19 pandemic and the Russian invasion of Ukraine.
In 2021, securities and property transfers also outperformed government predictions by a wide margin and boosted related taxes, Chu said.
Major firms posted robust earnings in the first half of last year, but saw acute inventory corrections in the final quarter, as drastic interest rate hikes by global central banks hurt demand for goods and services, he said.
This resulted in another year of massive tax surpluses, helped by a quick recovery in private consumption after COVID-19 restrictions were relaxed and the nation reopened its borders, the DGBAS said.
When factoring in COVID-19 spending, the government incurred a small deficit last year, Chu said.
Acting Minister of Finance Frank Juan (阮清華) said the two-year time lag plays an important part in creating tax surpluses or shortfalls.
GDP growth over the past two years deviated from long-term averages, making budget projections difficult, Juan said.
Former minister of finance Su Jain-rong (蘇建榮) told a tax forum yesterday that it is not accurate to say tax surpluses are policy mistakes, as some officials have said.
Tax surpluses stem from the nation’s stronger-than-expected economic performance, said Su, who has resumed his position as a professor of finance at National Taipei University.
Su said he had reservations about the cash distribution plan, saying that the government should first seek to pay off its debt and enhance its financial resilience to avoid fiscal deficits or financial shocks.
The government has accumulated huge debts, which could become burdens on future generations, Su said.
On Ireland’s blustery western seaboard, researchers are gleefully flying giant kites — not for fun, but in the hope of generating renewable electricity and sparking a “revolution” in wind energy. “We use a kite to capture the wind and a generator at the bottom of it that captures the power,” said Padraic Doherty of Kitepower, the Dutch firm behind the venture. At its test site in operation since September 2023 near the small town of Bangor Erris, the team transports the vast 60-square-meter kite from a hangar across the lunar-like bogland to a generator. The kite is then attached by a
Foxconn Technology Co (鴻準精密), a metal casing supplier owned by Hon Hai Precision Industry Co (鴻海精密), yesterday announced plans to invest US$1 billion in the US over the next decade as part of its business transformation strategy. The Apple Inc supplier said in a statement that its board approved the investment on Thursday, as part of a transformation strategy focused on precision mold development, smart manufacturing, robotics and advanced automation. The strategy would have a strong emphasis on artificial intelligence (AI), the company added. The company said it aims to build a flexible, intelligent production ecosystem to boost competitiveness and sustainability. Foxconn
Leading Taiwanese bicycle brands Giant Manufacturing Co (巨大機械) and Merida Industry Co (美利達工業) on Sunday said that they have adopted measures to mitigate the impact of the tariff policies of US President Donald Trump’s administration. The US announced at the beginning of this month that it would impose a 20 percent tariff on imported goods made in Taiwan, effective on Thursday last week. The tariff would be added to other pre-existing most-favored-nation duties and industry-specific trade remedy levy, which would bring the overall tariff on Taiwan-made bicycles to between 25.5 percent and 31 percent. However, Giant did not seem too perturbed by the
TARIFF CONCERNS: Semiconductor suppliers are tempering expectations for the traditionally strong third quarter, citing US tariff uncertainty and a stronger NT dollar Several Taiwanese semiconductor suppliers are taking a cautious view of the third quarter — typically a peak season for the industry — citing uncertainty over US tariffs and the stronger New Taiwan dollar. Smartphone chip designer MediaTek Inc (聯發科技) said that customers accelerated orders in the first half of the year to avoid potential tariffs threatened by US President Donald Trump’s administration. As a result, it anticipates weaker-than-usual peak-season demand in the third quarter. The US tariff plan, announced on April 2, initially proposed a 32 percent duty on Taiwanese goods. Its implementation was postponed by 90 days to July 9, then
RSS