Worrisome Finances, Even More Worrisome Ministry of Finance

Worrisome Finances, Even More Worrisome Ministry of Finance
China Times editorial (Taipei, Taiwan, ROC)
A Translation
September 16, 2009

Rating agencies such as Fitch and Standard & Poor's have harshly criticized the Republic of China's fiscal and debt situation. In September, the Ministry of Finance, under orders from the Executive Yuan, responded with a great flourish, by offering a "sound financial policy." From a public relations perspective, the program does seems to be boosting morale. It includes ten strategies. It includes three core management strategies to help local governments develop their own financial resources. It includes a three part way to "save money, find money, and make money." We must however point out that the program is a patchwork quilt of confused concepts. It reveals an unwillingness to confront the problem of too low tax rates, or consider long-term changes to the tax structure. Its reveals an even more confused understanding of the nation's tax system.
For years the Republic of China's tax rate has been less than 15%. It is much lower than that of all economically advanced countries. With such a low tax rate, unless the size of the Republic of China government is ultra-small, it must face the dilemma of unsustainable government spending. Not only that, President Ma's campaign platform included "Twelve Love Taiwan Construction Projects." More recently an emergency response to the global economic downturn has necessitated even more public spending. These have left the nation's finances in dire straits. But irresponsible politicians are afraid to face the real problem. They only want to appease voters to protect their jobs. Over the past year, despite the financial crisis, the Ministry of Finance has talked only of tax cuts. Today, the deficit is obvious. Yet the ruling authorities are still playing strategic word games with Three Core Management Strategies and Twelve Love Taiwan Construction Projects. Such obstinacy is truly mind-boggling.

We have good reason for saying that the Ministry of Finance lacks the courage to face the problem. According to Minister of Finance Li, the government's fiscal deficit will be made up through a public offering. Minister Li said that if the government sells 40% of its holdings, it will have no impact on earnings. An IPO will be good for the government and good for the company. Minister Li considers this a "stock certificates for dollar bills" scheme. He has absolutely no understanding of the concept of "public shares." Listening to him makes one skin crawl. If the government's finances require nothing more than tax cuts during normal times, and public offerings during times of crisis, why does the government need a Ministry of Finance? Why bother to teach finance in the universities? Why does the Ma administration need a Tax Reform Commission? The commission has been meeting for over a year. And this is its contribution to the nation's finances? How ironic.

Using shares of stock to earn dividends, or selling shares of stock to raise cash, requires detailed consideration of both the amounts involved and the timing of the transactions. It is hardly as simple as what Minister Lee suggests when he says "selling 40% of the government's shares will have no impact on earnings." The government's chief of finance has no medium to long term planning. He wants to hastily sell 40% of a cash cow. We are simply dumbfounded. Besides, how will selling stock address the problem of excessively low tax rates? Selling our heritage during the second half of the year merely highlights the absurdity of the Ministry of Finance's tax cuts during the first half of the year.

Besides, not all state-owned enterprises should be sold. Some state-owned enterprises have public policy functions. Therefore, the sale of shares will lead to a fundamental conflicts between profit-making private sector share holders and the government. People buy stocks to make money. If private sector shareholders cannot influence government policy, that means their profits are being adversely affected. When this happens, the stock will lose its market value. They will no longer command high prices. If private sector shareholders overwhelm the public offering, that means the government's policy objectives have failed. That means the government's justifications for a public enterprise cannot withstand scrutiny. If the Ministry of Finance must make a public offering of government shares to raise money, and support its policy objectives, then it doesn't understand the reason for public shares. It is hallucinating. It is indulging in unrealistic fantasies.

Take TaiSugar (TSC) for example. In order to meet soil and water conservation policy objectives, the government may at time reforest TaiSugar land. But as readers can imagine, if TSC has private shares, private sector shareholders will oppose it, since reforestation earns not profits. Furthermore, some state-owned enterprises, such as the Taiwan Tobacco and Wine Company, own large numbers of ancient artifacts. Often safeguarding historic artifacts interferes with the pursuit of profits. The hasty sale of public shares, without a sound understanding of the macro-level function of public enterprises, will merely lead to further controversy.

The high-profile political appointees on the political stage bear the greatest responsibility for the Republic of China's current financial difficulties. According to the Executive Yuan, the central government cannot come up with a budget for either next year or the year after. Such an urgent crisis requires people of ability. It requires people of vision to revise the tax plans. It does not require the reckless selling of public shares. Even with companies suitable for sale, killing the cash cow is a one time proposition. In terms of the national deficit, it is merely a drop in the bucket. It will not solve the nation's structural problems. If the Ministry of Finance implements its program, our sovereign rating for next year will not improve. We are concerned about the Republic of China's finances. But we are even more concerned about the mess that the Ministry of Finance refers to as a "sound program."

中時電子報 新聞
中國時報 　2009.09.17
社論－我們擔心財政 更擔心財政部
本報訊

為因應惠譽、標準普爾等信評機構對台灣財政與舉債狀況的嚴厲批評，財政部承行政院之命，在九月上旬提出了洋洋灑灑的穩健財政方案。就文宣技巧而言，該方案似乎有啦啦隊的效果：要推動十大策略、三大核心管理、開拓地方自有財源、「省錢、找錢、賺錢」三路著手。但是容我們不客氣的指出，這個方案是個凌亂拼湊、觀念混淆的雜燴，既不願面對租稅負擔率偏低的問題，也不敢考慮中長期的租稅架構調整，對國家租稅的整體觀念更是混淆不清。

台灣的租稅負擔率長年來約不到十五％，比所有經濟先進國家都來得低。這麼低的稅負率表示：除非台灣政府規模超級迷你，否則無論如何都會面對政府支出難以為繼的窘境。不只如此，馬總統政見中所宣示要辦理的愛台十二建設、以及最近因為世界經濟不景氣而應急所需的公共支出，在在都使得政府財政捉襟見肘。但是不負責任的政客就是不敢面對真正的問題，只知道討好民眾、保住官位。財政部在過去一年即使財務危機已現，卻還是不斷地減稅、減稅、減稅。到如今財政缺口明白呈現，主事者卻還是在玩三大核心、十大策略的文字遊戲。這種牛皮糖式的惰性作為，真是令人大開眼界。

我們說財政部不敢面對問題，可是有憑有據的。依照財政部李部長目前的規畫，政府的財務缺口要靠釋股以為彌補。李部長說，政府所持股票若能賣掉四○％，對盈餘沒影響，釋股後ＩＰＯ，對公司好對政府也好。李部長認為這是「以股票換鈔票」，背後卻完全沒有「公股」的概念掌握，聽來令人毛骨悚然。如果國家財政大計就只是平時減稅、窮時釋股這麼簡單，那麼國家何必要設財政部？大學何必要教財政學？馬政府又何必要設置賦稅改革委員會？賦改會開會一年多，竟然把國家財政弄成這副田地，這是何等的諷刺？

在財務概念上，用股票賺股息或賣股票變現，都有數量與時機的細緻考量，絕對不是像李部長所想的那麼簡單，「賣掉四○％對盈餘沒影響」。如果國家的財政主管完全沒有中長期的規畫，只為了應急就倉卒賣掉四○％的金雞母，我們除了瞠目結舌，真不知道如何面對。再說，賣股票能夠解決租稅負擔率偏低的問題嗎？下半年賣祖產，不正凸顯出上半年初財政部主導降稅的荒謬嗎？

此外，國營事業股票並不是樣樣都適合出售。有些國營事業的存在有其公共政策目的，故釋股將引發牟利民間持有者與官股政策的根本衝突。民間購買股票當然是為了賺錢；假設民間購股者無法影響政府政策，表示其賺錢的目標會受到壓抑。此時，這股票就沒有市場價值，賣不到什麼好價錢。如果民間購股者壓過了公股股權，則表示政府政策目標失守，該事業就不再能支持公營目的。財政部既要釋出公股賺錢、又要維持政策目的，根本就弄不清楚公股背後的意義，是夢囈之詞，虛幻而不切實際。

以台糖為例，政府有時為了水土保持的政策目的，要將台糖土地拿去造林。但讀者當能想像，台糖若有民股，民股會誓死反對此種不賺錢的造林作為。此外，有些國營事業（如台灣菸酒公司）轄下有大筆古蹟，往往需因古蹟維護而妨礙利益追逐。貿然釋出公股而欠缺公有事業的理念宏觀，勢將引發另一波爭議。

台灣當前的財政困境，坦白說檯面上的主管政務官要負最大的責任。依行政院估算，中央政府的預算將在明年或後年就編不出來。這樣的迫切危機，需要有能力的人、有視野的稅改計畫來解決，絕不是貿然釋股所能成事。而即便是適合釋股的公司，殺金雞母也只有一次性收入，對於國家財政赤字也只是杯水車薪，根本無助於解決結構性的問題。我們幾可斷言，依財政部的方案執行，明年台灣的信評必然不可能改善。我們憂心台灣的財政，但更憂心財政部凌亂雜燴的所謂「健全方案」。