The two presidential hopefuls, Democratic Progressive Party (DPP) Chairperson Tsai Ing-wen (蔡英文) and Deputy Legislative Speaker Hung Hsiu-chu of the Chinese Nationalist Party (KMT) (洪秀柱), have passively offered their views on how to deal with pension reform.
Tsai has suggested a national affairs conference in which all generations would participate. Her suggestions also include reducing the differences between the pension payments for different professions and reviewing pension financial planning and actuary reports.
Bluntly speaking, Tsai’s suggestions are nothing but a wait-and-see strategy. Instead of offering solutions, she is passing responsibility to a conference.
Hung, on the other hand, is calling for the ruling and opposition parties to face up to the pension issue sooner rather than later — and to initiate dialogue with concerned organizations and party factions to build consensus behind a solution.
The problem is that she is an eight-term legislator, but not only has she not reviewed the legislature’s responsibility in the postponement of pension reform, her rhetoric follows the same procrastination strategy that Tsai has adopted. It is clear that neither woman is ready to “bring out the beef.”
Japan’s fiscal deficit is equivalent to two years of its GDP, while some people have said it is experiencing a fiscal crisis as a result of an aging population and a diminishing workforce who have to pay for them. Taiwan’s fiscal situation is deteriorating rapidly, and one of the reasons for this is the aging population.
The pension issue is just one part of the fiscal landslide. It merely highlights the impact that pensions for state employees — military personnel, civil servants and public-school teachers — have on national finances, while ignoring the nation’s overall tax problem.
Both the KMT and the DPP favor big business and are afraid of reforming the world’s most unreasonable tax system. They use state pensions as a bat in the struggle between the pan-blue and pan-green camps, and the DPP uses the issue to turn public opinion against employees. This is a very irresponsible approach.
Taking a birds-eye view, a difficult fiscal situation does not only mean that retired people will not be able to get their pensions, it also means that civil servants will not be paid, infrastructure will not be maintained and there will be financial chaos. The way to resolve these issues is to reform the tax system and increase tax revenues.
Many rich people in Taiwan pay very little tax, with the Chinese-language Commonwealth Magazine dedicating an issue to reporting that “Taiwan is a low-tax paradise for the wealthy.” Could it really be that Tsai and Hung are not aware that this is unfair?
What the two candidates should do is not form a pension committee, but rather a committee dedicated to saving national finances, then set up pension and tax reform sub-committees.
Both the KMT and the DPP have ruled the nation and they should understand the dangers of a situation in which finances are originally balanced, but then deteriorate into a deficit before ending in a fiscal crisis. Despite that, the government’s reaction to the Greek debt crisis has been to propose passive solutions and the Cabinet has even suggested that civil servant salaries should be raised by 3 percent.
Using such methods to build support in the run-up to elections, and then implement cuts in the aftermath, is unfair to state employees.
As the presidential hopefuls make their reform proposals, they should apologize to the public for having helped delayed reform for so many years.
Chuang Chi-ming is a professor in the Department of Educational Management at National Taipei University of Education.
Translated by Perry Svensson
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