Tuesday, February 12, 2008

A Caretaker Cabinet must Know Its Place

A Caretaker Cabinet must Know Its Place
China Times editorial (Taipei, Taiwan, ROC)
A Translation
February 12, 2008

The Executive Yuan made several hasty decisions before the Lunar New Year. We feel compelled to make a heartfelt appeal, and issue a solemn warning. The premier and his cabinet are merely a caretaker government. They must be circumspect in their conduct.

Following Chinese New Year, the government will resume operation. It will remain in operation until the March presidential election, less than 40 days away. After 40 days, regardless of whether or Frank Hsieh or Ma Ying-jeou is elected president, every cabinet member will be reappointed. By then, the heads of the ministries will have radicaly changed. The period between now and May 20, when the new cabinet is formed, will be a "caretaker" period. A caretaker cabinet's responsibility is merely to maintain the status quo for the new cabinet, to allow its successor to implement its own policies. Therefore, a caretaker cabinet should not make too many high-level personnel changes. It should not propose any long-term policies. Still less should it propose any changes to the system itself. This ought to be Political Science 101a.

And yet the Ministry of Education rushed to issue its 2009 senior high school curriculum, just in time for Chinese New Year's Eve. These first-ever high school textbooks will be divided into A and B versions. They will delay the segregating of students until their senior year of high school. Does it make sense to issue two versions of high school textbooks, given existing academic pressures? This is clearly an issue the Ministry of Education Curriculum Group should give long and careful consideration to before implementation. This is radical change. It is also radical change that lacks public approval. It is hardly something that educational heads with only 40 days left in their term ought to promote. After the curriculum was announced, the principals of Jianguo High School, Zhongzhen High School, Dazhi High School, Taichung High School 2, Hualian Girls High School and others voiced strong reservations. Obviously the proposed changes failed to meet with the approval of frontline teachers and adminstrators.

In principle a caretaker ought not to make major changes. In practice its agenda has not met with the approval of most educators. The result will unnecessarily alarm parents. With much fanfare, the Ministry of Education announced these major policy changes during the Chinese New Year. This was not merely irresponsible. This was a means of avoiding debate, an admission they lacked the guts to confront public disapproval. The Ministry of Education is responsible for the nation's educational matters. Its policies impact students and parents. Yet it has acted with reckless haste. Does it want every high school student to "run home crying to mother?"

The Ministry of Education is not the only member of the cabinet that lacks a sense of propriety. The Ministry of Finance also announced its plans on Chinese New Years Eve. It announced that it was moving toward "tax reform." According to reports, future tax reform policy will be "low taxes, simple government." Beginning next year, in exchange for doing away with the Statute for Upgrading Industries, the Ministry of Finance will no longer employ backdoor listings. The Ministry of Finance intends to lower the business tax to 17.5%, and abolish the 10% levy. This is radical change that has a wide-ranging impact on tax policy. It is hardly appropriate for a cabinet whose term is about to run out, and as a general election approaches.

The Statute for Upgrading Industries incorporated sunset clauses limiting the amount of time "infant industries" would be protected. If these industries were still not competitive when these statutes expired, it meant they lacked comparative advantages, and tax cuts were no longer justified. If these industries had competitive advantages, then there was no need for protection. In short, the Statute for Upgrading Industries should be abolished, regardless. Yet in order to protect the beneficiaries of these tax cuts, the Ministry of Finance has offered them lowered business taxes in exchange. Shouldn't these controversial policies have been subjected to public scrutiny?

Take the 10% levy on retained earnings. The reason for levying a 10% tax on undistributed earnings is to comply with the resolutions of the Second Tax Reform Committee, which combined the two taxes. But the real reason for taxing retained earnings is that Taiwan has no capital gains tax. Combining the two taxes permits large scale tax evasion, making it necessary to plug the loopholes with a tax on retained earnings. The Statute for Upgrading Industries is about to expire. Inheritance taxes are about to be cut. Business taxes are to be adjusted. Many different issues are converging. They should be dealt with, along with the capital gains tax, once and for all. They should be turned over to a future Third Tax Reform Committee for a comprehensive solution. That is the only way. Cabinet members at the Ministry of Finance with only 40 days left in their terms have made hasty piecemeal changes to the tax rates. The Statute for Upgrading Industries will not expire for a while yet. We really can't understand why a caretaker cabinet is behaving this way.

Premier Chang and his cabinet should demonstrate self-discipline and self-respect. They must not make radical and reckless changes. The Legislative Yuan must stand firm. During this caretaker period it must not pass any tax cuts, tariff cuts, or other major, far-reaching legislation. The Kuomintang is the majority party. It must act as a strict gatekeeper. It must resist the temptation to pass any election-oriented legislation whose negative consequences cannot be reversed. The ROC has been spinning its wheels for nearly eight years. We have only 40 more days to go. If the executive or legislative branches are unable to resist temptation during this interim, if they are afraid to take the high road, if they endanger the long-term interests of the ROC, then they are truly unfit to govern.

中國時報  2008.02.12









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