According to a media survey, the economic recession, falling interest rates and other factors are heightening worries about poverty among a large portion of the country's workforce.
The 2001 Directorate General of Budget, Accounting and Statistics' (DGBAS) survey of family income and expenditure indicates that the average income of the wealthiest 20 percent of families increased to 6.39 times the average of the poorest 20 percent, up from a factor of 5.55 in the year 2000. Disparities in personal income between the top 10 percent and bottom 10 percent rose to 61.3, from 38.9 a year earlier. These increases suggest that the distribution of wealth is becoming polarized and that Taiwan is facing unprecedented poverty issues.
The first reason for this increasing gap is that low-income groups are not protected by a sound social security safety net. Changes in industrial infrastructure over the past year have resulted in the highest unemployment rate ever. Low-income households usually include mem-bers who are unemployed or working in low-wage industries, whose incomes are particularly likely to be affected by a slow economy.
The social welfare system remains an inadequate patchwork of welfare measures. Unemployment benefits, for example, are only available for six months, whereas the average time taken to find a job is nine months. With the exception of health insurance, no universal scheme of social insurance has been introduced. The unfair system of distribution of welfare resources, which favors the north over the south and public servants, military personnel and teachers over workers, farmers and fishermen, has not been improved.
The second cause is the unfairness of the tax system. Voter pressures lead politicians to make shortsighted decisions about the tax system. Combined with the influence of vested interests, this has produced a distorted system.
DGBAS statistics show that tax income has increased by an average of 2.54 percent per year over the last five years. In the same period, nominal economic growth has been 7.6 percent, three times the increase in tax income. One reason for this is that high-tech industries enjoy many tax advantages, including investment-related deductions and five-year tax exemptions.
Because of securities transactions tax exemptions, the government can exact almost no tax from the liberal compensation paid to shareholders and employees of high-tech industries. Since unlisted stocks are also exempt from this tax, many large capitalists turn their funds into assets by setting up investment companies, profiting hugely by avoiding inheritance and gift taxes. If taxation of teachers and military personnel is based on concerns about fairness, then what is the reason for continuing the preferential treatment of shareholders in the high-tech industries whose incomes are far greater?
When the Ministry of Finance realized that the non-performing loans issue represented a bottomless pit, the suspension of the business tax, which goes to the Financial Restructuring Fund, was extended from the original four years to 10 years. Doesn't extending the suspension of this tax delay the expansion?
If the government does not do its utmost to minimize preferential tax exemptions or investment-related tax deductions to these famed industries, and use this extra tax income generated to build a comprehensive social security system, we can predict that even if the government is willing to issue debt to finance growing welfare expenditure and thus become a hostage to the financial markets, the income gap will continue to grow and popular support for the government will fall further.
Tuan Yi-kang is a DPP legislator.
Translated by Grace Shaw and Perry Svensson
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