The legislature has passed the third reading of the government’s special relief package, allocating NT$235 billion (US$8.02 billion) for a universal NT$10,000 cash handout, while scrapping a NT$100 billion subsidy for Taiwan Power Co (Taipower), which raised the package’s total ceiling from NT$410 billion to NT$545 billion.
The opposition Chinese Nationalist Party (KMT) passed its version of the bill, with the support of the Taiwan People’s Party. Together they wield a majority in the legislature.
The Special Act for Strengthening Economic, Social and National Security Resilience in Response to International Circumstances (因應國際情勢強化經濟社會及國土安全韌性特別條例) was proposed in April to counter the impacts of US President Donald Trump’s tariffs.
The Cabinet’s proposed special budget included NT$93 billion for economic resilience, NT$150 billion for whole-of-society defense resilience and NT$167 billion for social support, which included a NT$100 billion subsidy for Taipower, as well as a NT$20 billion and NT$10 billion subsidy for national health insurance and labor insurance respectively.
The bill, which is intended to “return money to the people,” might boost the economy. It might also be unconstitutional and questionable on legal grounds for several reasons.
First, the government should make long-term plans. That the government has tax surpluses is because Taiwan’s economic performance was better than expected, which is not guaranteed every year. Apart from repaying debts, tax surpluses should be used to improve infrastructure or social welfare, so that the nation’s economic resilience can be enhanced.
A universal cash handout could jeopardize the country’s capability for national construction. Taxation is to maintain a country’s operation and improve infrastructure. Returning tax surpluses defeats that purpose. Unless there is an urgent need to rescue the economy, the cost of distributing cash would have a negative impact on the economy.
Second, a cash handout would not boost the economy. In the past, no matter whether it was the KMT or the Democratic Progressive Party in power, consumption vouchers were released along with other measures to stimulate consumption to maximize economic efficiency. The government did not simply distribute cash, which could result in consumers spending it on things that they would use their own money to buy. That would mean that the cash handout would not increase consumption.
Additionally, scrapping the NT$100 billion subsidy for Taipower would raise electricity rates and commodity prices, which would increase the burden on economically vulnerable groups.
It is clearly not worthwhile to sacrifice controlling electricity prices, a long-term benefit, for a cash handout, a short-term benefit. It would not help the economy grow and would not benefit the disadvantaged much.
Third, it is a misuse of public resources. Taxation is in itself a public good, which should be used for the benefit of the public.
A universal cash handout is not only unfair, but it was also proposed by the KMT to please voters to avoid being recalled. It is a blatant misuse of public funds to seek personal gain.
The KMT’s attempt to buy popular support through a universal cash handout amid recall elections obviously underestimates civil society in Taiwan. Using public resources to buy votes shows that KMT lawmakers disregard national interests in pursuit of personal gains. That is why mass recall campaigns are surging nationwide.
Hsu Hui-feng is a professor in CTBC Business School’s Department of Business and Economic Law.
Translated by Fion Khan
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