The Ministry of Finance recently announced that the government last year collected record-high tax revenue, exceeding its budget projections by NT$528.3 billion (US$16.03 billion). Determining how the surplus should be used has become a focal issue for the government and opposition parties.
The Chinese Nationalist Party (KMT) has proposed that the government distribute NT$10,000 in cash to each taxpayer to directly return the funds to the public.
Would that really support the long-term interests of the nation?
From the perspective of fiscal stability, it would be more cautious and forward-thinking to prioritize use of the surplus to reduce the national debt.
Many people mistakenly believe that tax revenue surplus means that the government has extra income, but that is not the case.
A surplus simply means that the national tax revenue collected exceeded the amount that was predicted — it does not mean that the treasury is overflowing.
When former president Tsai Ing-wen (蔡英文) took office in 2016, the central government’s debt was NT$5.39 trillion, Ministry of Finance data showed. It is expected to increase to NT$6.01 trillion this year, with interest payments alone of hundreds of billions of New Taiwan dollars annually.
Although using the surplus revenue for cash handouts would stimulate short-term consumption, it would not benefit the country’s financial system.
In contrast, investing in national debt repayment would reduce interest expenditures and improve the flexibility of the government’s financial operations.
One argument in support of the KMT’s proposal is that the economic benefits should be shared among every taxpayer.
However, a one-time subsidy would not address structural economic issues. If the government’s finances remain unstable in the long term, it might need to increase taxes or cut public spending, which would also affect everyone.
Using the surplus to reduce the national debt would free up resources that the government could invest in public infrastructure, education and social welfare to further enhance national competitiveness.
Many countries are facing high national debts. Poor financial management can exacerbate the issue and give rise to more severe economic crises.
In the past few years, the global economic environment has changed dramatically and rising interest rates might increase states’ financing costs. If the central government does not take advantage of its relatively stable financial situation to reduce the national debt, fiscal pressure is likely to increase.
Moreover, reducing the debt would improve the country’s credit rating, which would lower its financial costs and make Taiwan more competitive in the international market.
The smart use of the surplus revenue is crucial to the country’s fiscal stability and development. The government should avoid short-sighted fiscal maneuvers in search of instant gratification.
Rather than cash handouts, the government’s priority should be reducing the national debt to ensure fiscal resilience, while making appropriate public investments to enhance the nation’s competitiveness.
Sound fiscal policy is the cornerstone of long-term national development. Only through thoughtful planning can future generations be saved from bearing heavy financial burdens, with the added benefit of a more stable and sustainable economy.
Dino Wei is an engineer.
Translated by Kyra Gustavsen
Taiwan is a small, humble place. There is no Eiffel Tower, no pyramids — no singular attraction that draws the world’s attention. If it makes headlines, it is because China wants to invade. Yet, those who find their way here by some twist of fate often fall in love. If you ask them why, some cite numbers showing it is one of the freest and safest countries in the world. Others talk about something harder to name: The quiet order of queues, the shared umbrellas for anyone caught in the rain, the way people stand so elderly riders can sit, the
Taiwan’s fall would be “a disaster for American interests,” US President Donald Trump’s nominee for undersecretary of defense for policy Elbridge Colby said at his Senate confirmation hearing on Tuesday last week, as he warned of the “dramatic deterioration of military balance” in the western Pacific. The Republic of China (Taiwan) is indeed facing a unique and acute threat from the Chinese Communist Party’s rising military adventurism, which is why Taiwan has been bolstering its defenses. As US Senator Tom Cotton rightly pointed out in the same hearing, “[although] Taiwan’s defense spending is still inadequate ... [it] has been trending upwards
Small and medium enterprises make up the backbone of Taiwan’s economy, yet large corporations such as Taiwan Semiconductor Manufacturing Co (TSMC) play a crucial role in shaping its industrial structure, economic development and global standing. The company reported a record net profit of NT$374.68 billion (US$11.41 billion) for the fourth quarter last year, a 57 percent year-on-year increase, with revenue reaching NT$868.46 billion, a 39 percent increase. Taiwan’s GDP last year was about NT$24.62 trillion, according to the Directorate-General of Budget, Accounting and Statistics, meaning TSMC’s quarterly revenue alone accounted for about 3.5 percent of Taiwan’s GDP last year, with the company’s
In an eloquently written piece published on Sunday, French-Taiwanese education and policy consultant Ninon Godefroy presents an interesting take on the Taiwanese character, as viewed from the eyes of an — at least partial — outsider. She muses that the non-assuming and quiet efficiency of a particularly Taiwanese approach to life and work is behind the global success stories of two very different Taiwanese institutions: Din Tai Fung and Taiwan Semiconductor Manufacturing Co (TSMC). Godefroy said that it is this “humble” approach that endears the nation to visitors, over and above any big ticket attractions that other countries may have
RSS