How Can Financial Officials View the Budget Act with Such Contempt?

How Can Financial Officials View the Budget Act with Such Contempt?
China Times editorial (Taipei, Taiwan, ROC)
A Translation
May 8, 2009

First, several provisions of the Budget Act must be mentioned.

Article 34 of the Budget Act states that "Before major policy plans are promoted, alternatives and cost-benefit analyses must be made, and the source of financing and the use of funds explained."

Article 45 of the Budget Act states that "When general budget revenues and expenditures are imbalanced, the (Executive Yuan) must work with central government financial officials to seek solutions."

The Republic of China currently has two problems. One. Leave aside the growing deficit in public infrastructure construction projects. The Ministry of Finance estimates that expenditures this year will exceed revenues by at least 200 billion. This is a clear violation of the Budget Act. Yet no one in the cabinet cares. Two. The Executive Yuan Financial Supervisory Commission and other agencies care only about protecting themselves. They have repeatedly proposed a variety of tax cuts.

A few days ago the FSC proposed tax cuts to attract foreign capital back to Taiwan. It wants future bank income from interest, funds, bonds, and insurance to benefit from cuts in business taxes, stamp duties, and business income taxes. This of course constitutes a "major policy plan" as defined in Article 34 of the Budget Act. Yet the FSC has never mentiond cost-benefit analyses and alternative sources of financing. No one, from finance ministers to the Vice President of the Executive Yuan bothered to look at the Budget Act. It is rumored that the Ministry of Finance supports the Financial Supervisory Commission's policy. The Executive Yuan has suddenly inherited yet another tax cut proposal. financial officials at the FSC apparently view the nation's laws as nothing more than waste paper.

Since the Financial Supervisory Commission is so enthusiastic about tax cuts for financial services, let's analyze the pros and cons. We would like to ask three questions: On what basis? For what reason? For what purpose? First, on what basis must financial services be exempted from taxation? Chairman Chen said that if the aforementioned three financial services are tax exempt, profit margins will increase, making them more attractive to customers. Such an argument seems plausible at first. But when applied universally, one realizes it is nonsense. What industry won't show higher profits once it is exempt from taxes? What industry won't attract more customers if it has larger profit margins? If this is the rationale for tax exemption, then why not make agricultural products tax-free, service sector services tax-free, IC products tax-free? Why should anyone pay taxes on anything? The FSC chairman spoke out on behalf of the financial industry. Other government agencies may well speak out on behalf of other industries. Does the cabinet give a damn about the Republic of China Budget Act?

Next, the Financial Supervisory Commission wants to exempt financial services from taxation in order to attract foreign investment. But for what reason? The foreign investment the FSC wants to attract pertain to funds, structural debt, insurance policies, and other financial assets. Once these financial assets enter Taiwan, most of them will flow into the stock market and real estate. They are different from investment in physical infrastructure construction. In fact, Taiwan's private capital is abundant. So abundant that bank are refusing large deposits. If the FSC is right about five trillion in funds flowing into the Taiwan stock market and housing market, it could lead to asset bubbles akin to those in Iceland and Ireland. If signs of trouble appear and capital flees, what will happen to Taiwan? Chairman Chen was trained in the law. He does not seem to understand that capital flows into Taiwan do not mean increased GDP. His desire to attract investments to Taiwan financial assets is the result of conceptual confusion and erroneous thinking.

We must also ask, for what purpose is the Executive Yuan's economic team constantly calling for tax cuts? Executive Yuan officials cite Paul Krugman. They say they are promoting the same Keynesian policies that Bill Clinton advocated. But what they are doing runs counter to Krugman's policy. Krugman advocated increased government spending and increased public construction. Therefore they were willing to endure a temporary deficit. Clinton opposed tax cuts. He believed in the indirect multiplier effect of taxes. Furthermore, many tax cuts often benefit only select groups among the wealthy. They fail to boost social spending. Yet over the past year our financial officials have repeatedly proposed indiscriminate "Pseudo-Krugman" tax cut policies. They have said one thing, but done another. We really have no idea where they are going.

Finally, let's get back to the Budget Act. The Budget Act has hundreds of provisions. But its essence is balance. On the one hand, the ruling adminstration must live within its means, avoiding unnecessary expenditures, and imposing only essential taxes. On the other hand, the ruling administration should also take into account sustainable management. It must ensure opportunities for our children and grandchildren. Responsible political leaders will be guided by past budget planning lessons. Instead, financial officials are constantly attempting to curry favor with the public, scattering money in every direction, and treating the Budget Act with contempt. Seeing the Financial Supervisory Commission and the Ministry of Finance treat the taxation system and budget process with such contempt forces us to level our harsh criticisms.

中時電子報 新聞
中國時報 　2009.05.08
社論－財經閣員怎可視「預算法」如無物？
本報訊

在進入主題前，我們想先引幾條預算法的法律條文，再闡述我們的論點。

預算法卅四條：「重大施政計畫，應先行製作選擇方案及替代方案之成本效益分析報告，並提供財源籌措及資金運用之說明。」

預算法第四十五條第二項：「總預算案歲入、歲出未平衡時，（行政院）應會同中央財政主管機關提出解決辦法。」

現在台灣的明顯情況有二，一是即使不論擴大公共建設方案的赤字，財政部預估今年稅收將短收兩千多億，明顯違反預算法，但內閣卻無人理會。二是金管會等行政院機關只顧本位，一再提出各種減稅案。

就拿日前金管會所提吸引外資回台減稅案為例：該會希望將來銀行的利息收入、出售基金與結構債收入、出售保單收入，都能享受營業稅、印花稅、營所稅三項租稅的減免；這當然屬於預算法卅四條所列重大政策。但金管會既沒有提成本效益分析與替代財源籌措說明，下自財經閣員上自行政院副院長也無人正眼瞧一下預算法的規範。據說財政部對金管會的政策頗為支持，似乎一時之間行政院又多了一項減稅案。看來，堂堂國家法律文書，在金管會等財金首長眼中，連廢紙都不如。

既然金管會主事者這樣熱中金融商品的租稅減免，我們就來好好分析一下其利弊取捨。在這裡要問三個問題：憑什麼？為什麼？幹什麼？首先，我們要問「憑什麼」金融商品要免稅？陳主委說，金融商品專戶的資金若能免除前述三種稅捐，則理專利潤空間變大，將更能吸引客戶。這樣的論述乍看言之成理，但卻是適用各行各業的廢話。哪一個行業免稅之後利潤空間不會變大？又有哪一個行業利潤空間變大了不能吸引客戶？如果這樣的理由也能合理化免稅，那麼農產品也該免稅、服務業也該免稅、ＩＣ產品該免稅，天下還有什麼東西需要繳稅？金管會主委就為金融業講話，那麼各個事業主管部會也都為其事業發聲，我們真不知道，中華民國的預算法內閣究竟還關不關心？

其次，金管會主張金融商品免稅以吸引外資入台，我們還要問「為什麼」？金管會所想要吸引的外資，是指購買基金、結構債、保單等金融資產。這些金融款項進入台灣體系之後，絕大多數會流向股市與房地產，其與實體建設的投資截然不同。其實，台灣民間資金淹腳目，錢多到銀行都想拒收大額存款。如果真的如金管會所期望的，有五兆資金回台炒作股市房市，恐怕台灣也會掀起一波「冰島級」、「愛爾蘭級」的資產泡沫。萬一將來有什麼風吹草動以致資金流出，則台灣又是什麼下場？陳主委是習法出身，他似乎並不理解：錢流入台灣並不表示會創造ＧＤＰ。莫名其妙地要吸引熱錢來台灣投資金融資產，其實是觀念混淆的錯誤思維。

此外，我們也要請問，行政院的財經團隊整天呼籲減稅，究竟在「幹什麼」？行政院閣員人手一冊克魯曼的書籍，也口口聲聲地說在推動克氏所主張的凱因斯經濟學，但所作所為卻盡是些背道而馳的政策。克魯曼主張增加政府支出、擴大公共建設，因此而有暫時的赤字亦在所不惜。但是克氏卻一再反對減稅，他認為減稅的乘數效果間接，且諸多減稅也往往圖利了特定有錢群體，無助於提升社會支出。但是我們的財經部會過去一年卻一再提出胡亂減稅的「假克魯曼」政策，這樣說一套做一套，實在令人看不懂財經閣員的施政方向。

最後，還是回到預算法，談談我們的感觸。我們想說的是：預算法雖然條文逾百，其精義卻只有兩個字：「平衡」。一方面，執政者要量入為出，避免不必要的開支、課徵必要的稅收；另一方面，執政也要顧及永續經營，保住子孫的發展機會。負責任的政治人物，一定會把僅具訓示意義的預算規範奉為圭臬。但財經官員卻永遠搶著做大眾情人，四處討好、隨時散財，視預算法如蔽屣。看到金管會與財政部對稅制與預算的藐視，我們不得不做出如此沉重的評論。