Premier William Lai (賴清德) yesterday ordered the government to hasten its efforts to reach agreements with the US in response to the US’ planned tax reform, which could boost exports and help Taiwanese businesses reduce their reliance on China by relocating their investments to the US.
The US’ Tax Cuts and Jobs Act signed into law last year introduces reduced tax rates for businesses and individuals in a bid to spur economic growth, with its effects expected to be felt internationally.
However, the reform plan is forecast to have limited influence on Taiwan’s economy, a National Development Council analysis showed.
Photo: CNA
The tax cuts are expected to increase personal disposable income and spur domestic consumption in the US, which would stimulate Taiwan’s exports to the US in the short term, but whether it would turn into long-term export growth remains to be seen, the council said.
For every 1 percentage point growth of the US economy, there is a 0.15 percentage point increase in Taiwan’s exports and a 0.07 percentage point of growth of Taiwan’s economy, the council said.
The tax reform plan could influence the global strategy of large-scale Taiwanese businesses, prompting them to set up manufacturing bases in the US, but the policy’s affect on small and medium-sized enterprises would be limited, it added.
Taiwanese manufacturers, with a high-degree of automation, can adjust to the highest workforce costs in the US, the council said.
Major conglomerates such as Hon Hai Precision Industry Co, known as Foxconn Technology Group outside Taiwan, and Formosa Petrochemical Corp have announced large investment plans in the US in response to the tax reduction, the council said.
The US is Taiwan’s seventh-largest foreign investor, and most US businesses investing in Taiwan, such as Costco and Applied Materials, are tapping into the domestic market or supply chains, so they are not expected to withdraw from Taiwan back to the US, the council said.
The tax reform plan, coupled with a trade war between Washington and Beijing, could see Taiwanese businesses relocate from China to the US, Southeast Asian nations or back to Taiwan, thereby reducing Taiwan’s reliance on China, the council said.
Lai ordered the Cabinet to increase efforts to reach bilateral tax agreements with the US to eliminate trade barriers, such as double taxation, while increasing the mobility of personnel, capital, technology and merchandise.
Improvements have to be made to advance Taiwan’s investment environment amid a possible surge of international companies relocating to the US, Lai said.
To improve Taiwan’s competitiveness, a stable supply of electricity, water, land and skilled workers has to be maintained, while restrictions on financial laws have to be lifted to encourage private-sector investment, the council said.
Civil society groups yesterday protested outside the Legislative Yuan, decrying Chinese Nationalist Party (KMT) efforts to pass three major bills that they said would seriously harm Taiwan’s democracy, and called to oust KMT caucus whip Fu Kun-chi (傅?萁). It was the second night of the three-day “Bluebird wintertime action” protests in Taipei, with organizers announcing that 8,000 people attended. Organized by Taiwan Citizen Front, the Economic Democracy Union (EDU) and a coalition of civil groups, about 6,000 people began a demonstration in front of KMT party headquarters in Taipei on Wednesday, organizers said. For the third day, the organizers asked people to assemble
Taipei is participating in Osaka’s Festival of Lights this year, with a 3m-tall bubble tea light installation symbolizing Taiwan’s bubble tea culture. The installation is designed as a bubble tea cup and features illustrations of Taipei’s iconic landmarks, such as Taipei 101, the Red House and North Gate, as well as soup dumplings and the matchmaking deity the Old Man Under the Moon (月下老人), affectionately known as Yue Lao (月老). Taipei and Osaka have collaborated closely on tourism and culture since Taipei first participated in the festival in 2018, the Taipei City Department of Information and Tourism said. In February, Osaka represented
POOR IMPLEMENTATION: Teachers welcomed the suspension, saying that the scheme disrupted school schedules, quality of learning and the milk market A policy to offer free milk to all school-age children nationwide is to be suspended next year due to multiple problems arising from implementation of the policy, the Executive Yuan announced yesterday. The policy was designed to increase the calcium intake of school-age children in Taiwan by drinking milk, as more than 80 percent drink less than 240ml per day. The recommended amount is 480ml. It was also implemented to help Taiwanese dairy farmers counter competition from fresh milk produced in New Zealand, which is to be imported to Taiwan tariff-free next year when the Agreement Between New Zealand and
IDENTITY SHIFT: Asked to choose to identify as either Taiwanese or Chinese, 83.3 percent of respondents chose Taiwanese, while 8.4 percent chose Chinese An overwhelming majority of Taiwanese, 71.5 percent, think that Taiwan should compete in international competitions under the name “Taiwan,” a Taiwan Brain Trust survey published yesterday showed. Referring to Taiwan’s victory last month at the World Baseball Softball Confederation’s Premier12, the survey results showed that 89.1 percent of respondents said that Taiwan’s exceptional performance in sporting competitions furthers national unity. Only 18.8 percent of respondents supported Taiwanese teams’ continued use of the name “Chinese Taipei” in international sporting competitions, the survey showed. Among Taiwan’s leading political parties, the name “Team Taiwan” was supported by 91.1 percent of self-identified Democratic Progressive Party (DPP) supporters,
RSS