This year’s tax revenue surplus exceeded NT$528.3 billion (US$15.96 billion). The Chinese Nationalist Party (KMT) is proposing to “return money to the people,” with a plan to send a universal cash payout of NT$10,000 to every taxpayer. The KMT-majority legislature has passed a first reading of a special legal proposal to that end.
However, Taiwan Power Co (Taipower), facing long-term pressure from price increases on international energy imports since Russia’s invasion of Ukraine in 2022, has sustained long-term losses for several years in a row. The utility company has racked up about NT$400 billion in debt to date.
The Executive Yuan originally planned to allocate more than NT$100 billion in subsidies from the surplus tax revenue to alleviate some of the pressure on the electricity provider and stave off risks of electricity price hikes.
However, the KMT’s slashing of the budget has prevented Taipower from receiving subsidies It is being forced to bear all-out pressure to raise electricity prices, which would ripple into the daily lives of all Taiwanese following a price hike.
Handing out a universal cash payout to everyone seems like a beneficial policy decision, but the reality is that such measures have a limited effect on economic growth and stimulating domestic demand.
Experience shows that most Taiwanese would opt to put such universal cash payouts into savings accounts or to pay off personal debt — a limited amount of that money ever makes its way back into consumer markets, and its contribution to GDP is negligible. On the contrary, it is extremely easy to turn tax rebate payouts into a tool for currying favor with voters.
Shoring up Taipower could directly reduce the pressure of electricity price-adjustment pressures from annual losses, and would help the nation avoid society-wide price hikes and soaring prices, which would further maintain consumer price index stability.
Electricity price hikes not only drag on more expensive kitchen-table economics, they can increase the operational overhead for everyone, as reflected in consumer prices and living expenses.
Thus, the legislature should shift away from its goal of shortsighted, near-term benefits via a universal cash payout, and instead move to pay off Taipower’s losses and stabilize our energy grid and energy pricing structures.
That would be the best way to benefit the entire nation: It could reduce Taipower’s debt and the growing pressure to raise rates, while guaranteeing that basic living expenses would not be impacted by potential electricity rate hikes.
Although a universal cash payout is on the surface more desirable, in the end it only obscures the bigger picture. In critical times such as these, we should hope that all of the nation’s political parties would put comprehensive thought into governance and use resources where they matter most to create policy that truly benefits everyone.
Lee Li-sheng is a research assistant at the Taiwan Economy and Industry Association and a graduate student at National Taiwan Normal University.
Translated by Tim Smith
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