Conventional wisdom holds that tax revenue increases amid a growing economy. However, Taiwan’s lower-than-expected tax revenue last year is contrary to this widely held view.
Government statistics show that GDP expanded 3.11 percent year-on-year last year, but tax revenue fell 2.9 percent, following a 3.5 percent increase in the previous year.
“In 2020, tax revenue totaled NT$2.398 trillion [US$84.62 billion at the current exchange rate], a decrease of NT$71.9 billion, or 2.9 percent, from 2019. It was the first decline in 11 years, mainly due to decreased corporate income tax revenue and commodity tax revenue,” the Ministry of Finance said in a report on Saturday.
Photo: Clare Cheng, Taipei Times
Even though revenue from the securities transaction tax soared to a record high last year, while land value increment tax revenue and revenue from gift and inheritance taxes also increased sharply, total tax revenue last year was NT$22.3 billion below the government’s target, the ministry said.
“It is the first time in seven years that the government has failed to meet its revenue goal,” the ministry’s report said.
The ministry reported preliminary tax revenue data for last year on Jan. 12, and it offered more accurate and detailed statistics on Saturday, including tax data from other government agencies and deferred tax revenue from December last year.
Based on its report, corporate income tax revenue decreased by NT$170.9 billion, or 26.4 percent, from the previous year, the largest fall among all tax items and a record drop for the income tax.
The ministry attributed the decline to lackluster earnings in 2018 of listed companies, tax cuts on companies’ undistributed earnings and the preferential tax rates for industrial innovation.
Last year, firms affected by the COVID-19 pandemic could apply for deferred tax payment or extension of tax payment in installments, and companies that met certain conditions were exempt from temporary payment, also affecting tax revenue, the ministry said.
Commodity tax revenue fell NT$6.7 billion, or 3.8 percent, which the ministry said was mainly due to government policies including tax rebates for the purchase of new vehicles and energy-saving home appliances.
Among all tax items, the securities transaction tax, business tax, tobacco and alcohol tax, and vehicle license tax generated the highest revenue on record last year, while the personal income tax, inheritance tax, customs duty and house tax reported the second-highest level on record, the report said.
Regarding the correlation between tax revenue and economic growth, the ministry said that the two have in the past few years often deviated, suggesting that they do not necessarily maintain “a symmetrical relationship” in the long run.
“There are three factors behind this deviation,” it said.
First is the price factor: The ministry said that the economic growth rate refers to the change in real GDP excluding the effect of prices, but tax revenue changes are affected by price and trade volume, the ministry said.
Second, to measure GDP, the total output of all industries, the input of intermediates is deducted, but taxes are levied on all of them, it said.
Thus, GDP and taxation are not immediately connected, the ministry added.
Third, changes in the tax system and taxation rates, as well as new inspecting and auditing measures would have an effect in the longer term, the ministry said.
Tesla Inc temporarily halted some production at its auto assembly plant in California because of problems with its supply chain, but work has begun to resume, CEO Elon Musk told employees in an e-mail on Thursday. “We are experiencing some parts supply issues, so took the opportunity to bring Fremont production down for a few days to do equipment upgrades and maintenance,” Musk said in an all-staff message seen by Bloomberg. The factory was “back up and running as of yesterday,” and would rapidly ramp up to full production of Model 3 and Model Y cars “over the next several days,”
PUNCTURE-PROOF: Air Fom tires are made of material used in sports shoe soles and offer a comfortable ride, although people are still skeptical about solid tires Getting a flat tire is a nightmare for cyclists, sending home early any rider who had ventured outdoors without a repair kit or spare inner tubes. Although punctured tires have long been a pain point for cyclists, the problem has never been effectively resolved, despite the bicycle industry going back centuries. A few products have been developed to help reduce the likelihood of flat tires: puncture-resistant tires, which are thicker than usual tires or come with a protective layer; anti-puncture tapes, which are placed between the tire and inner tube to offer extra protection; and tubeless systems that use sealant to close
LONG-TERM PLAN: The company expects growth in revenue from its automotive business this year and that it would contribute meaningfully to sales from 2023 Hon Hai Precision Industry Co’s (鴻海精密) new electric vehicle (EV) platform is expected to help launch vehicles later this year, chairman Young Liu (劉揚偉) said on Saturday, signifying major progress in the electronics giant’s push into the automotive industry. Two light vehicles designed using the company’s MIH Open Platform would be unveiled in the fourth quarter, Liu told reporters at the company’s headquarters in New Taipei City’s Tucheng District (土城). Hon Hai might at the same time also help launch an electric bus, he said. Hon Hai has been seeking to expand its automotive capabilities at a time when technology companies including
The production value of Taiwan’s semiconductor industry grew 20.9 percent year-on-year to NT$3.22 trillion (US$113.6 billion) last year, and it is expected to build on that performance this year, the Industrial Technology Research Institute’s (工研院) Industry, Science and Technology International Strategy Center said yesterday. The global semiconductor market grew 6.8 percent to US$440.4 billion last year, boosted by robust demand from the digital transformation and growing stay-at-home economy seen during the COVID-19 pandemic, the center said. That strength is likely to carry over to this year, leading to an 8.6 percent increase in domestic output to a new record NT$3.49 trillion,