The government’s annual tax surplus last year exceeded NT$528.3 billion (US$16.16 billion), setting an unprecedented record, Ministry of Finance data showed.
To reduce the pressure of recalls, the Chinese Nationalist Party (KMT) legislative caucus has announced a “return money to the people 2.0” campaign for this legislative session, demanding that the government provide every citizen with NT$10,000 in tax surplus revenue.
In response, the ministry said the tax surplus should be used to reduce the government debt, adding that using the surplus for cash handouts would be inappropriate.
The ministry is right. I also disagree with the cash handouts. The real meaning of the so-called “tax surplus” is that the tax collection is higher than the original estimate.
The tax surplus does not mean there is a “fiscal surplus.” The country has neither made any undue gains nor was there any unnecessary increase in taxes exceeding what should have originally been collected.
If the KMT’s plan is implemented, the total amount of money disbursed to citizens would exceed NT$230 billion. That could negatively impact Taiwan’s national finances, and to be frank, the nation’s financial situation is already one of heavy debt — the government is barely able to make ends meet as it is.
On the surface, returning a portion of the tax surplus to the public might appear to be returning people’s money. However, given that each person’s tax contribution is different, how can the government return the tax fairly? Attempting to do so might affect the basic function of tax collection.
Essentially, taxation also means allowing wealthier people make greater contributions to society — the so-called “ability to pay” principle. If the government has to distribute the surplus to the public evenly, would such a practice not contradict the basic function of tax affordability? Not to mention it would also be unfair to some taxpayers.
It should also be taken into consideration that during the COVID-19 pandemic, the nation repeatedly issued public bonds just to raise funds for relief and prevention. Taiwan’s public debt significantly increased as a result. As the government finds itself in this poor financial situation, how can it arbitrarily spend its tax surplus?
If the government spreads the money around now just because it has a slight increase in tax revenue, is this not leaving the responsibility of handling the national debt to future generations? It should not be forgotten that the money in the national treasury ultimately belongs to Taiwanese. If that money is spent recklessly, the public would be forced to bear the consequences.
The government has failed to handle other policies — such as the adjustment of the military service system, as well as subsidies for the labor and health insurance funds — that are in urgent need of more funding. Returning the surplus is short-sighted and lacks an overall vision — that is not a blessing for the country.
Opposition legislators have joined hands to amend the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法), which would provide more funding to local governments. That move is estimated to increase the total revenue of the local governments by more than NT$370 billion.
Due to the amendment, after the central government’s total budget was cut, many government agencies do not even have enough in service fees.
Meanwhile, Taiwan Power Co’s huge financial losses remain unresolved and the national defense budget has even been affected. All these problems could be solved with the proper use of the surplus.
Dino Wei is an engineer.
Translated by Eddy Chang
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