The Nation's Finances Need Internal Checks

The Nation's Finances Need Internal Checks
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
April 16, 2010

After months of stalemate in the legislature, the "Industrial Innovation Act" has suddenly experienced a reversal of fortune. The KMT is using its legislative majority to decide how the bill should be modified for passage. The question however, is whether the ruling party's policy coordination can be reconciled with President Ma's policy making.

Regrettably the current policy about face reveals serious oversights in the Ma administration's financial policy analysis, involving President Ma, the Presidential Office, the Executive Yuan, and his advisors. We hope to explain the basics of financial decision making in a series of editorials. These editorials would amount to a commentary on the decision-making process and policy direction of the president and his financial advisers. The most controversial aspect of the Industrial Innovation Act concerns taxation. Therefore we will begin by addressing the issue of taxation, and gradually broaden our critique from there.

The version of the bill originally sent to the Legislative Yuan was the result of discussions between the Ministry of Economic Affairs and the Ministry of Finance. It was even approved by the Tax Reform Commission and the Executive Yuan. It was subjected to thorough discussion and study because the impact of financial policy decisions can be extremely complex and require professional analysis. They are often matters the man in the street cannot understand. Businessmen and the public alike naturally want lower taxes. Therefore when financial decisions come face to face with populist sentiment or elected officials, the result is invariably tax cuts all the way. Industrial and business tycoons are usually more adept than salaried workers at lobbying the executive and the legislature. Professionals are forced to step back, and no one is left to defend the larger interests of the nation. Populist fiscal policy or legislation may not always pander to Big Business, but it is often unconducive to the overall health of the economy.

Our emphasis on the importance of the nation's finances is nothing new. It applies to the large scale revenues and expenditures of all economic entities. Let us take a law everyone is familiar with to illustrate the importance of fiscal and financial policy. Article 14 of the Securities and Exchange Act states that listed companies must establish an independent board of directors, or "Audit Committee." Its most important task is to elect the company's Chief Financial Officer and and Chief Auditor. If we compare the government to a corporation, the Chief Financial Officer and Chief Auditor are the equivalent of the Minister of Finance, the Comptroller, and the Auditor General. According to Article 14 of the Securities and Exchange Act, a listed company's financial and auditing directors must be independent. They must not be appointed by the General Manager. They must not even be subject to the control of the Chairman of the Board. Most listed companies insist on this level of independence and professionalism for their financial managers. Can a nation's government demand less? Therefore a nation's financial and accounting heads must be professional and resolute. They must not even be subject to the control of the premier (General Manager) and president (Chairman of the Board). The premier and the president should respect the authority of financial and accounting heads.

The law does not set professional standards for most corporate financial officers, only for large listed companies, mainly because the bigger the company, the more serious the consequences of any financial irregularities. A company need not worry about financial problems as long as everything is proceeding smoothly. But when a company is expanding its operations or is facing troubled times, financial management and control becomes particularly important. Our current financial heads are clearly more concerned about being obedient than they are about being professional. As a result they are silent about the Industrial Innovation Act, and expose the lack of financial checks and balances in our government.

The government faces two challenges. One. The Ma administration has pledged to promote its "Twelve Love for Taiwan Construction Projects." These require a budget of four-trillion over eight years. The amount is staggering. Two. Global climate change is exerting pressure on the government. Every summer and fall Taiwan is subject to natural disasters. These often require the expenditure of hundreds of billions of dollars. It is easy to imagine the government's financial burden under these twin pressures. Those in authority must be vigilant. How can they overlook such problems? Two years ago, in July, when the Tax Reform Commission was established, the Ma administration had an excellent opportunity to complete a sound, long term, macro level financial plan in tune with his national infrastructure plans. Unfortunately, the Tax Reform Commission defaulted, and instead promoted hasty, piecemeal, emergency policies and bills. It left the government's financial structure confused, and experts and scholars devastated.

All through 2009, the Ma administration promoted haphazard tax cuts. Even now, the Ma administration seems unaware of the seriousness of the fiscal deficit. Its response to the Industrial Innovation Act is to "Stabilize the situation by shouting 17%." Its tendency to pander to populist sentiment is deeply worrying. The government's financial status has gone from bad to worse. It has been repeatedly downgraded by international credit rating agencies, and blasted by both the Blue and Green media. The root of the problem is national leaders seriously deficient in their understanding of financial and fiscal affairs. The Ma administration desperately needs to mend the holes in its financial policy making process.

國家財政需有內建的把關機制
【聯合報╱社論】
2010.04.16 02:13 am

「產創條例」立法爭議僵持數月之後，該案近日有出人意表的一百八十度轉向。以國民黨在國會的優勢，要將產創條例如何修理應都會在立法院通過；問題在於，執政黨黨內的協調與馬總統決策形成的過程，是否禁得起檢驗。

令人遺憾的是，由此次產創條例政策大轉彎，凸顯出馬總統及其府院幕僚在財經政策研析的嚴重疏漏。我們想藉這一系列社論，說明財經決策的幾點基本理則，其實也是對總統本人及其周邊財經幕僚陣容、決策機制、政策方向的整體評論。產創條例的爭議焦點之一是「稅」，因此我們先從「稅」這個特定領域，逐漸延伸做更廣泛的批評。

產創條例原本送到立法院的版本，是經過經濟部與財政部討論、也經過賦稅改革委員專案計畫核算、更經過行政院院會通過的版本。之所以要經過這麼縝密的討論與核算，就是因為財經事務的衝擊極為複雜，又涉及相當專業的考量，往往不是一般「庶民」所能理解。企業與人民當然希望降稅多多益善，因此財經事務訴諸民粹或民意代表，結論必然是降稅一途。一般而言，由於工商業大老闆較薪水階級長於行政與立法遊說，故在專業退位、國家整體利益缺乏捍衛的情況下，民粹式的財經政策或立法不但會向資本家傾斜，也往往不利於經濟的整體發展。

我們在此特別強調「國家」財政的重要性，其實並非新論，而是所有涉及大金額財務收支經濟團體的共同特徵。茲以一個眾所熟悉的法律內容，來說明財政與財務的重要性。證交法第十四條規定，上市公司一定要由若干獨立董事設置「審計委員會」，而該會之最重要任務，就是選任公司之財務長與總稽核。若將國家比喻為公司，則財務長與總稽核就像是國家的財政部長、主計長與審計長。依據證交法十四條規範之意旨，上市公司的財務與稽核等專業主管，應該要相當獨立，不但不是公司總經理所任命，甚至也不受公司董事長所節制。一般上市公司對於財務人員的獨立性與專業性如此堅持，國家又焉能背道而馳？準此，國家的財政主計首長，尤其需要專業夠強、理念清晰，甚至要不太受行政院長（總經理）與總統（董事長）之節制，而行政院長與總統則應充分尊重財政主計首長的權限。

法律不對一般企業的財稽人員專業性有所規範，卻只對上市的大公司規範，主要就是因為公司越大、財務出問題的後果就越嚴重。不只如此，公司若在平順時期，不需太過憂心財務問題，但若是公司在擴張業務期間、或面臨多事之秋，則財務管控的重要性就格外凸顯。以台灣的情況來看，我們現任的財政主計首長，顯然是服從性大於專業性。正因為如此，他們對於產創條例的噤聲，就反映出台灣財政把關的輕忽了。

當前的台灣面臨了兩方面的挑戰：其一是馬政府信誓旦旦要推愛台十二建設，需要八年四兆的預算，金額十分驚人。其二是在全球氣候變遷的壓力下，台灣每年夏秋都可能遭逢天災侵襲，動輒需要數千億預算的支援。在這雙重預算壓力之下，國家財政負擔之重可想而知，主事者自應戰戰兢兢，焉能輕忽怠慢？馬政府原本有大好的機會，以前年七月成立的賦稅改革委員會做完整的、宏觀的、長期的規劃，以穩健的財務步伐，配合國家建設的推動。可惜的是，賦改會捨此不圖，卻以倉促的、零碎的、救急的政策與法案，將台灣的財政結構弄得滿目瘡痍，令專家學者心情沉重。

經過二○○九年一整年的胡亂降稅，馬政府至今似乎還沒有意識到財政赤字的嚴重性，對產創條例修正仍然一副「十七％喊價定局面」的民粹媚俗態勢，這是非常令國人憂慮的現象。台灣財政之所以每下愈況、被國際信評屢次降等、被藍綠媒體重批，追根究柢，就是國家領導人嚴重欠缺財務與財政的基本觀念。這是馬政府在財經決策上亟需補強的第一個闕漏。