The Cabinet last week said that it plans to give each Taiwanese a one-off cash payment of NT$6,000 (US$195.47) from NT$450 billion in surplus tax revenue, although President Tsai Ing-wen’s (蔡英文) administration had earlier ruled out any plans for a handout, saying that it prioritized giving the money to at-risk sectors to bolster the resilience of Taiwan’s economy in times of global uncertainty.
Sharing the excess tax revenue with the public would surely make people happy, even though some pundits have said that the windfall should instead be used to repay debts or build infrastructure. Therefore, the government’s policy U-turn on the issue suggests that political considerations outweighed concerns about the global economy, as there is no evidence that giving cash to the public would stimulate consumer spending.
The Cabinet’s decision to share surplus tax revenue with the public is unprecedented. While the Chinese Nationalist Party (KMT) government recorded surplus tax revenue in five of former president Ma Ying-jeou’s (馬英九) eight years in office from 2008 to 2016, with the surplus in 2015 reaching nearly NT$200 billion, no calls for returning surplus tax revenue to the public. However, calls for the government over tax rebates became louder after Tsai took office in 2016.
Indeed, the national tax revenue exceeded the government’s budgetary expectations in 12 of the past 16 years, with surpluses almost becoming the norm in the past few years. Critics have blamed this on a structural inaccuracy in the government’s revenue forecasting model. This could be due to the nation’s economic performance leading to a discrepancy between estimated and actual revenue, or fiscal conservatism by forecasters, resulting in underestimation of tax revenue in anticipation of potential economic challenges.
In any case, three questions arise from the government setting a precedent by giving people cash from surplus tax revenue:
First, should surplus tax revenue always be handled in the same way in the coming years?
Second, does this policy mean that closing the funding gap in government programs and repaying government debt are the next generation’s problems?
Last, if cash handouts are implemented in times of surplus tax revenue, should people be asked to pay more taxes when tax revenue falls short of government expectations? As a follow-up question: Are there any countries with similar tax systems?
With Taiwan’s economy facing multiple headwinds stemming from falling external demand, supply chain realignment, weak consumer spending, and macroeconomic and geopolitical challenges, repeated calls by lawmakers across party lines for the government to give people tax rebates amount to nothing but a populist move ahead of next year’s presidential and legislative elections.
Although government borrowing under the Tsai administration has been much lower than during the previous administration, a special budget of up to NT$840 billion to contain the spread of COVID-19 and provide relief to affected businesses has led to a marked increase in overall national debt. For instance, the central government’s outstanding debt with maturity of one year and above, including government bonds and long-term borrowing, has reached NT$5.71 trillion, or about 30 percent of the average GDP in the past three years.
Lawmakers have long voiced concerns about soaring national debt and demanded that the government keep the nation’s finances from deteriorating. However, their calls for a cash handout while the government is trying to reduce debt and increase repayment suggest that maintaining fiscal discipline is less important than scoring political wins.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
If you had a vision of the future where China did not dominate the global car industry, you can kiss those dreams goodbye. That is because US President Donald Trump’s promised 25 percent tariff on auto imports takes an ax to the only bits of the emerging electric vehicle (EV) supply chain that are not already dominated by Beijing. The biggest losers when the levies take effect this week would be Japan and South Korea. They account for one-third of the cars imported into the US, and as much as two-thirds of those imported from outside North America. (Mexico and Canada, while
I have heard people equate the government’s stance on resisting forced unification with China or the conditional reinstatement of the military court system with the rise of the Nazis before World War II. The comparison is absurd. There is no meaningful parallel between the government and Nazi Germany, nor does such a mindset exist within the general public in Taiwan. It is important to remember that the German public bore some responsibility for the horrors of the Holocaust. Post-World War II Germany’s transitional justice efforts were rooted in a national reckoning and introspection. Many Jews were sent to concentration camps not
RSS