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.
UNPRECEDENTED PACE: Micron Technology has announced plans to expand manufacturing capabilities with the acquisition of a new chip plant in Miaoli Micron Technology Inc unveiled a newly acquired chip plant in Miaoli County yesterday, as the company expands capacity to meet growing demand for advanced DRAM chips, including high-bandwidth memory chips amid the artificial intelligence boom. The plant in Miaoli County’s Tongluo Township (銅鑼), which Micron acquired from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion, is expected to make a sizeable capacity contribution to the company from fiscal 2028, the company said in a statement. It would be an extended production site of Micron’s large-scale manufacturing hub in Taichung, the company said. As the global semiconductor industry is racing to reach US$1 trillion
A man walks past real-estate advertisements outside a house in Taipei yesterday. The central bank yesterday said it plans to establish an “Inflation-at-Risk” gauge as a supplementary tool for observing inflation, as policymakers express wish to communicate more effectively with the public when making inflation forecasts.
ABOVE LEGAL REQUIREMENT: The Ministry of Economic Affairs is prepared if LNG supply is disrupted, with more than the legal requirement of 11 days of inventory Taiwan has largely secured liquefied natural gas (LNG) supplies through May and arranged about half of June’s supply, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. Since the Middle East conflict began on Feb. 28, Taiwan’s LNG inventories have remained more than 12 days, exceeding the legal requirement of 11 days, indicating no major supply concerns for domestic gas and electricity, Kung said at a meeting of the legislature’s Economics Committee in Taipei. The ministry aims to increase the figure to 14 days by the end of next year, he said. While one or two LNG or crude oil shipments for May
Taiwan’s food delivery market could undergo a major shift if Singapore-based Grab Holdings Ltd completes its planned acquisition of Delivery Hero SE’s Foodpanda business in Taiwan, industry experts said. Grab on Monday last week announced it would acquire Foodpanda’s Taiwan operations for US$600 million. The deal is expected to be finalized in the second half of this year, with Grab aiming to complete user migration to its platform by the first half of next year. A duopoly between Uber Eats and Foodpanda dominates Taiwan’s delivery market, a structure that has remained intact since the Fair Trade Commission (FTC) blocked Uber Technologies Inc’s
RSS