Why Implement Tax Reform?

Why Implement Tax Reform?
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
February 14, 2012

Summary: The new cabinet has been in office one week. Tax reform will undoubtedly become its most closely followed policy issue. The government's endless flip-flopping reflects the pressure it is under. Last Saturday, President Ma finally announced his tax reform policy, which will be based on "fairness and justice, geared to one's ability to pay." This raises the question, "Why implement tax reform?"

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The new cabinet has been in office one week. Tax reform will undoubtedly become its most closely followed policy issue. Control Yuan President Wang Chien-hsiuan strongly recommends a tax increase. Kuomintang legislator without portfolio Tseng Chu-wei walked out without addressing the capital gains tax issue. The securities transaction tax, profits tax, and "new tax every day" on the rich, remain unresolved. The government's endless flip-flopping reflects the pressure it is under. Last Saturday, President Ma finally announced his tax reform policy, which will be based on "fairness and justice, geared to one's ability to pay." This raises the question, "Why implement tax reform?"

The government has offered countless reasons for tax reform. For example: The tax system must be reformed because government revenue is inadequate. The tax system must be reformed because economic development demands it. The tax system must be reformed because it is too messy. The tax system must be reformed because the election is over. The tax system must be reformed because public resentment must be appeased. Regardless what justifications are offered for tax reform, one must never reform merely for the sake of reform. One must never reform on a selective, piecemeal basis. One must never pander to populist sentiment. One must never abandon one's principles and ideals. Especially since current tax reform program was begun only after President Ma had already won a second term. President Ma is not under any reelection pressure. He has an excellent opportunity to ensure that the reforms are sound. The financial tsunami has highlighted the increasing wealth gap and social opposition between rich and poor due to excessive capitalism. Tax reform is the social consensus. There is no excuse to postpone it or shrink from it. It represents the hopes of a majority of the community. Tax reform will be a critical part of President Ma and the KMT's legacy.

Compare the current tax reform program to previous tax reform programs. Current tax reform has two causes. The first is excessively low tax rates. The tax burden rate is the ratio of taxes to gross domestic product (GDP). Last year it was 12.8%. It has risen from the global low of 11.9% two years ago. But it remains low nonetheless. The tax burden rate is merely an indicator. It represents the effect, not the cause. Problems with the tax burden rate cannot be resolved by uttering the magic word, "tax increase." Otherwise raising the business tax rate by one percentage point would increase income by about $50 billion dollars. The tax burden rate would also immediately increase. One need not even amend the law. Wouldn't that be so much simpler? The sales tax does not distinguish between rich and poor. It is a consumption tax. The bulk of the tax burden is born by the proletariat. Such tax increases are inconsistent with President Ma's "fairness and justice, geared to one's ability to pay."

The tax burden rate measures the national tax burden. It also measures the soundness of the financial base. It reflects the impact of taxation on economic activity. In recent years the national tax rate has decreased. This means the national tax burden is lower. But the fiscal base has also become weaker. This is harmful to long-term development. More importantly, the gross domestic product and taxes cannot interact. They may even have become delinked. The tax system has a major problem. The economy has grown, but the tax rate has not grown with it. This affects more than fiscal income. It undermines the tax system's ability to stabilize the economy. It is even a source of unfair income distribution. The lower tax burden rate causes serious problems. This is why the tax system requires study and reform. Fiscal income is only one reason for the problems we face. It is not the sole reason. It is not the primary reason.

Another reason for tax reform is to achieve "fairness and justice." The pursuit of fairness and justice may seem like a given. But it only became an international issue after the financial tsunami struck. The World Economic Forum in Davos, Switzerland last month called the unequal and unjust gap between rich and poor a significant risk to economic development, It called on nations to give it their full attention. In order to encourage investment and promote development on Taiwan, the government once provided tax relief. That has gradually been phased out. But exceptions remain. To attract foreign capital following the financial tsunami, the government implemented massive cuts for inheritance taxes, gift taxes. and income taxes for profit-making enterprises. The deeper problems remain. The tax system increasingly benefits the rich. President Ma likes to cite statistics. But he should keep one number in mind. According to income statistics, over the past five years the average tax rate for the highest income group, was 4.18%, the lowest in three years. The rate for the lowest income group was 2.4%, higher than when the Ma administration first took office. The income gap between rich and poor is widening. The tax gap between rich and poor is narrowing. This is a crowning irony for a tax system ostensibly geared on one's ability to pay.

Therefore the unequal and unjust provisions of the current tax system must be corrected, This is the key to achieving equality and justice. This is the direction we must take. Tax reform has four principles. One. A review of the tax system must not be confined to any specific tax. The income tax system is the best showcase for a tax system geared to one's ability to pay. Naturally it is going to be the focus of any review conducted, But capital gains taxes include the income tax and land taxes. New economic behavior and taxes must be harmonized. This too requires review, to avoid robbing Peter to pay Paul. Two. The administration must look forward. Some scholars say tax reform studies can never be anything but incomprehensible. They must nevertheless make them comprehensible. One need not waste time re-convening a fiscal reform conference. But past research is outdated. It may serve as a starting point. But discussion and communication are essential for any conclusion. Three. Reform must not be limited to amending the law. One can also promote reform through administrative means. One need not wait for tax reforms before acting. For example, real estate and land taxes should be determined on the basis of actual market prices. Four. Less talk. More action. Once the decisions have been made, one should "just do it." The "new tax every day" approach forces the administration to waste time explaining everything to everybody. This is pointless, and is unhelpful to tax reform.

稅改為何而改？
【聯合報╱社論】 2012.02.14

新內閣上任一周，稅制改革無疑成為各界最關注的政策，監察院長王建?力主加稅，國民黨不分區立委曾巨威謂不談資本利得稅就走人；而證券交易所得稅、暴利稅，到富人稅的「每日一稅」，官方反覆不定的說詞則反映了所承受的龐大壓力。直到上周六，馬總統終於為稅改定下「公平正義、量能課稅」的方向，這才讓稅改回到了「為何而改」的正題。

政府稅改的理由千百種，政府收入不夠要改，發展經濟要改，稅制凌亂要改，選舉過後也要改，排解民怨更要改，但不論怎麼改，就是不能為改而改，以選擇性修補、投民所好的民粹式改革交差了事，使稅改失去原則及理想；尤其這次稅改，是在馬總統當選連任後啟動，沒有選票壓力的馬總統在政治面擁有了絕佳的改革時機，而金融海嘯凸顯資本主義過度發展下的貧富差距惡化與貧富對立分化亂象，亦為稅改注入最需要的基本社會共識，稅改不只沒有任何藉口推遲或縮水，還承載了社會的廣大期待，更是馬總統、國民黨以稅改留下歷史評價的關鍵一役。

相對於歷次稅改，這次稅改有兩個清楚的源頭。第一個是租稅負擔率偏低。租稅負擔率是稅收占國內生產毛額（ＧＤＰ）的比率，去年為百分之十二點八，雖比前年全球最低的百分之十一點九有所回升，但仍屬低水準。然而，租稅負擔率是一個表象數字，呈現的是結果而非成因，絕非一句「加稅」就可以解決，否則只要提高營業稅稅率一個百分點就可增收約五百億元，租稅負擔率也可立即上升，還不必修法，豈不簡單易行？但營業稅是不論貧富，有消費就課稅，繳稅占大宗的還是普羅大眾，這樣的加稅自不符合馬總統所說的「公平正義、量能課稅」。

再者，租稅負擔率除用以衡量國民租稅負擔，也在測量財政基礎的穩健度，更在於反映稅收與經濟活動的連動性。因此，近年我國租稅負擔率下降，雖然代表國民租稅的負擔降低了，但財政基礎的穩健度也跟著下降，不利長期建設發展；更重要的是，國內生產毛額與稅收間無法互動，甚或脫離，顯示稅制出了很大問題，以致經濟有成長，但稅收未有相應成長，其影響的不只是財政收入，也未發揮稅制應有的景氣穩定機制，甚至成為所得分配不公之源。這些才是租稅負擔率下降所反映出來的重要課題，也正是稅改須研究改革的內涵，財政收入僅是其中之一，但非唯一，更非主要面向。

另一個源頭就是實現「公平正義」。追求公平正義看似理所當然，但直到金融海嘯之後才成為國際顯學，上月在瑞士達沃斯舉行的世界經濟論壇更將不公不義導致的貧富分化列為經濟發展的重大風險，疾呼各國重視。在台灣，早年為促進投資、發展經濟而採行的租稅減免雖已逐步取消，但仍留下不少特例，甚至在金融海嘯後為了吸引外來資金而大舉調降遺產贈與稅、營利事業所得稅，加以沉痾未除，使得稅制愈來愈有利富人。馬總統喜歡用數字說明政績，但有一個數字他應警惕在心，依所得統計，前年五等分最高所得組的平均稅率為百分之四點一八，是三年來最低，而最低所得組是百分之二點四一，卻比馬政府上任時高，貧富「所得」差距擴大而「稅負」差距縮小，實為稅制量能課稅精神的最大諷刺。

因此，矯正當前稅制中不公不義的規定，是實現公平正義的核心。依此方向，稅改的推展有四個原則：第一，檢討不限於特定稅目，所得稅制是最能彰顯量能課稅精神的稅目，自是檢討重點，但資本利得稅涵蓋的稅目除了所得稅，還有土地相關稅目等，加以新經濟行為以及各稅目間的調和等，都應一併檢討，以免挖東補西；第二，要有前瞻性觀點，雖有學者認為稅改研究已是汗牛充棟，方向亦明，不必再召開財改會浪費時間，但過去的研究畢竟有時空差異，可以當基礎卻不能做結論，研討、溝通流程仍屬必要；第三，改革不限於修法，能以行政手段達成者應即推動，不必等待稅改結論，例如讓房地課稅價格貼近市價等；第四，少說多做，謀定後動，「每日一稅」搞得府院時時澄清，就是一種虛耗，於稅改無益。