The unexpected announcement by Premier Liu Chao-shiuan (劉兆玄) last Tuesday that state-owned refinery CPC Corp, Taiwan (CPC, 台灣中油) would raise gasoline and other fuel prices the following day triggered harsh criticism from skeptics.
Liu has faced criticism over his handling of the matter and the potential damage this could have on the new government’s administrative credibility. However, he has defended the policy as a way of preventing stockpiling and maintaining public safety.
To mitigate growing inflation concerns and guard against a drop in consumer spending, Liu said consumers would only have to absorb 60 percent of the increases, with the government and CPC accounting for the rest in equal parts.
The problem is simple: How long can the Chinese Nationalist Party (KMT) government afford to shield consumers with such subsidies without draining the national coffers? If the Democratic Progressive Party government deserved criticism for price controls — a practice that hurt the state oil company at the expense of all taxpayers — then it is difficult to see how the KMT’s measures are any different. The take home message is that both parties have little sympathy for the user-pays principle.
The government should reconsider the benefits that would flow from a truly competitive domestic fuel market.
Such a market appears more important by the day, given that the privately owned Formosa Petrochemical Corp (FPC, 台塑石化) said that it would raise gasoline and diesel prices two days after the government’s announcement to match those of its rival.
Despite differences in financial structure and operations, CPC and FPC have allegedly colluded in a market that has become a duopoly since the withdrawal of ExxonMobil Corp from Taiwan in 2003.
FPC’s latest price hikes remind us that the two refiners are almost certainly engaging in a protracted game of price-fixing, and this will continue indefinitely if there is no reform.
One reason CPC can absorb 20 percent of the price increases is because the government agreed to lower the commodity tax on gasoline and diesel — by 19 percent and 35 percent respectively — for a period of six months to compensate the state refiner so that it could pass on lower increases to consumers.
What makes informed consumers really angry is that the tax cut also applies to the profitable FPC, which already enjoys a handsome profit from fuel exports, at a time when the national coffers are estimated to be suffering losses of NT$9.6 billion (US$315.7 million) in tax revenue for this six-month period.
Higher domestic gasoline and diesel prices are inevitable at this time, and the government must rely on tax cuts and other subsidies to cushion inflationary pressures in the short term.
But the government’s role is different to that of private citizens and companies. Its goal is to maintain balanced development in the allocation of resources, wealth distribution and economic growth over the long term rather than getting bogged down in daily price adjustments.
Creating a more competitive market is vital at times of privation, and requires the removal of barriers to petroleum imports, including high tariffs, as well as unpredictable — even nonsensical — government intervention.
The gutting of Voice of America (VOA) and Radio Free Asia (RFA) by US President Donald Trump’s administration poses a serious threat to the global voice of freedom, particularly for those living under authoritarian regimes such as China. The US — hailed as the model of liberal democracy — has the moral responsibility to uphold the values it champions. In undermining these institutions, the US risks diminishing its “soft power,” a pivotal pillar of its global influence. VOA Tibetan and RFA Tibetan played an enormous role in promoting the strong image of the US in and outside Tibet. On VOA Tibetan,
Former minister of culture Lung Ying-tai (龍應台) has long wielded influence through the power of words. Her articles once served as a moral compass for a society in transition. However, as her April 1 guest article in the New York Times, “The Clock Is Ticking for Taiwan,” makes all too clear, even celebrated prose can mislead when romanticism clouds political judgement. Lung crafts a narrative that is less an analysis of Taiwan’s geopolitical reality than an exercise in wistful nostalgia. As political scientists and international relations academics, we believe it is crucial to correct the misconceptions embedded in her article,
Sung Chien-liang (宋建樑), the leader of the Chinese Nationalist Party’s (KMT) efforts to recall Democratic Progressive Party (DPP) Legislator Lee Kun-cheng (李坤城), caused a national outrage and drew diplomatic condemnation on Tuesday after he arrived at the New Taipei City District Prosecutors’ Office dressed in a Nazi uniform. Sung performed a Nazi salute and carried a copy of Adolf Hitler’s Mein Kampf as he arrived to be questioned over allegations of signature forgery in the recall petition. The KMT’s response to the incident has shown a striking lack of contrition and decency. Rather than apologizing and distancing itself from Sung’s actions,
US President Trump weighed into the state of America’s semiconductor manufacturing when he declared, “They [Taiwan] stole it from us. They took it from us, and I don’t blame them. I give them credit.” At a prior White House event President Trump hosted TSMC chairman C.C. Wei (魏哲家), head of the world’s largest and most advanced chip manufacturer, to announce a commitment to invest US$100 billion in America. The president then shifted his previously critical rhetoric on Taiwan and put off tariffs on its chips. Now we learn that the Trump Administration is conducting a “trade investigation” on semiconductors which
RSS