Academics yesterday said they doubted the effectiveness of a luxury tax and a pay raise for civil servants, saying both would do little to help make the tax system more just or fix the problem of widening wealth disparity.
Cheng Li-chun (鄭麗君), executive director of Taiwan Thinktank, said salary increases for public servants over the past decades had motivated the private sector to raise employee wages because unemployment was low and demand for labor was higher than the supply.
However, unemployment has soared and the supply of labor has surpassed demand, making the private sector less inclined to raise salaries, she said.
Nor would the pay raise help boost domestic consumption, Cheng said, adding that the consumer vouchers that were distributed to help boost consumption at the height of the financial crisis in 2008 and which cost the state NT$80 billion (US$2.75 billion) had not accomplished their goal.
The NT$22 billion pay raise for civil servants would not achieve its goal either, she said.
Cheng said the main reason for the unfair tax system was that 75 percent of the nation’s tax revenues came from wage earners, who account for only 44.5 percent of GDP.
The rich do not pay enough taxes, she said.
Tristan Liu (呂曜志), an economist at the Taiwan Institute of Economic Research, said that globalization has had a structural impact on the nation’s industries, employment and population, making the allocation of income more lopsided.
“While the tax system is an important element for advancing social justice, the government has been cutting taxes for the rich,” he said. “The result is that the rich become better-off and the poor become worse-off.”
Lu called on the administration of President Ma Ying-jeou (馬英九) to treat tax reform as an important social issue that requires dialogue between the government and the public rather than just with big business.
The luxury tax cannot help resolve the exacerbation of uneven income distribution, Liu said, adding that the estimated revenue of between NT$15 billion and NT$16 billion from the luxury tax would be insufficient to pay for the substantial amount of social welfare that will be required.
To make the tax system fairer, Liu proposed that tax on non-residential properties be based on the initial cost of the property rather than the assessment value. Land value increment tax and the home and property trading taxes should also be calculated this way, Liu said.
In the long-term, Liu said the government should consider including the capital gains obtained by securities and futures trading in the income tax calculation.
Wang Jung-chang (王榮璋), convener of the Alliance for Fair Tax Reform, said the Ma administration is continuing to borrow money despite worsening public debt and a higher budget deficit.
Each Taiwanese shoulders NT$910,000 in debt, a number which is estimated to reach NT$1 million next year, he said. By 2013, the government will not be able to earmark a government budget as the money borrowed would reach the legal limit of 40 percent, Wang said.
Su Jain-rong (蘇建榮), a professor of public finance at National Taipei University, described the luxury tax as a quick fix to the long-term structural problems of the tax system and ineffective in dealing with the problem of disproportionate income distribution.
To make the tax system fairer, Lue Jen-der (呂建德), a professor of social welfare at National Chung Cheng University, proposed making more low-income families eligible for welfare payments and lightening the taxation burden for employees.
For the middle-class, Lue said the government should establish a better social welfare system so they do not have to worry about childcare or paying for care for the elderly. For the wealthy, he said, any unnecessary tax cuts for should be scraped and that the current income tax rate should be replaced by a progressive expenditure taxation policy.
‘DENIAL DEFENSE’: The US would increase its military presence with uncrewed ships, and submarines, while boosting defense in the Indo-Pacific, a Pete Hegseth memo said The US is reorienting its military strategy to focus primarily on deterring a potential Chinese invasion of Taiwan, a memo signed by US Secretary of Defense Pete Hegseth showed. The memo also called on Taiwan to increase its defense spending. The document, known as the “Interim National Defense Strategic Guidance,” was distributed this month and detailed the national defense plans of US President Donald Trump’s administration, an article in the Washington Post said on Saturday. It outlines how the US can prepare for a potential war with China and defend itself from threats in the “near abroad,” including Greenland and the Panama
A wild live dugong was found in Taiwan for the first time in 88 years, after it was accidentally caught by a fisher’s net on Tuesday in Yilan County’s Fenniaolin (粉鳥林). This is the first sighting of the species in Taiwan since 1937, having already been considered “extinct” in the country and considered as “vulnerable” by the International Union for Conservation of Nature. A fisher surnamed Chen (陳) went to Fenniaolin to collect the fish in his netting, but instead caught a 3m long, 500kg dugong. The fisher released the animal back into the wild, not realizing it was an endangered species at
The High Prosecutors’ Office yesterday withdrew an appeal against the acquittal of a former bank manager 22 years after his death, marking Taiwan’s first instance of prosecutors rendering posthumous justice to a wrongfully convicted defendant. Chu Ching-en (諸慶恩) — formerly a manager at the Taipei branch of BNP Paribas — was in 1999 accused by Weng Mao-chung (翁茂鍾), then-president of Chia Her Industrial Co, of forging a request for a fixed deposit of US$10 million by I-Hwa Industrial Co, a subsidiary of Chia Her, which was used as collateral. Chu was ruled not guilty in the first trial, but was found guilty
DEADLOCK: As the commission is unable to forum a quorum to review license renewal applications, the channel operators are not at fault and can air past their license date The National Communications Commission (NCC) yesterday said that the Public Television Service (PTS) and 36 other television and radio broadcasters could continue airing, despite the commission’s inability to meet a quorum to review their license renewal applications. The licenses of PTS and the other channels are set to expire between this month and June. The National Communications Commission Organization Act (國家通訊傳播委員會組織法) stipulates that the commission must meet the mandated quorum of four to hold a valid meeting. The seven-member commission currently has only three commissioners. “We have informed the channel operators of the progress we have made in reviewing their license renewal applications, and