The National Economics and Trade Conference Should Address Tax Reform

The National Economics and Trade Conference Should Address Tax Reform
China Times editorial (Taipei, Taiwan, ROC)
A Translation
June 18, 2014

Summary: The Academia Sinica recently published its "Tax Reform Policy Proposals." It addressed the problem of fiscal red ink and urged tax reform. Academia Sinica member Wang Ping, convenor of the team, spent nearly a year discussing, analyzing, and researching the problem. He concluded that the government has three major problems. He made six major recommendations. The government and the public should give his report the attention it deserves.


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The Academia Sinica recently published its "Tax Reform Policy Proposals." It addressed the problem of fiscal red ink and urged tax reform. Academia Sinica member Wang Ping, convenor of the team, spent nearly a year discussing, analyzing, and researching the problem. He concluded that the government has three major problems. He made six major recommendations. The government and the public should give his report the attention it deserves.

We are pleased to see members of the Academia Sinica, the nation's foremost research institute, emerge from their ivory tower, develop a civic spirit, and attempt to help the public. The report offered six recommendations. It did not prioritize them or draw up a timetable. Nevertheless they can serve as a blueprint for future government policy.

The report mentioned three major issues. The 2012 tax rate of 12.8% was among the lowest in the world. Payroll tax proceeds accounted for the lion's share. Corporate and capital income taxes were on the low side. Too much income was non-taxable. There was no sign of improvement in the deficit, which has worsened. These are the most important reasons for our government's fiscal problems. These problems have been around for ages. They are community-wide structural problems. A seven year long illness cannot be cured by three years of treatment.

The government's tax rate is too low. The proportion of corporate taxation is too low. Wage earners bear the heaviest tax burden. Surveys of family income and expenditures clearly reveal the nature of the problem.

In 2005, there were 7.1 million households on Taiwan. That year about 5.5 million households filed consolidated tax returns. Therefore nearly 1.6 million households, legal and illegal, filed no returns. Approximately 5.5 million households reported inadequate family incomes under 50,000 NT per month. Nearly 4 million households reported annual household gross income under 595,000 NT. The remaining 1.5 million, or 20 percent of all households, were largely newly married couples with two incomes. They bear most of the government's tax burden. Taxes on Taiwan are levied in a highly inequitable manner.

Corporate and capital income is undertaxed. The report said "Our national tax base is basically an income tax on wages." A large proportion of non-wage related taxes are evaded, Most Taiwan businesses are SMEs. Even tax authorities in advanced countries have a hard time getting a handle on small business income." No country advanced as the ROC can become a tax paradise. SMEs almost never pay taxes. Their financial records are not subject to audits. Their records are kept by accountants. Tax returns are filed based on invoices. The expenses of business owners, family members, as well as others, are all covered by the company.

We cannot expect ivory tower academics to implement these reforms. We must depend on taxing agencies to redesign the system and remedy the problem.

Discussions and recommendations about the consumption tax are a top priority. The government's consumption tax, a 5% value-added tax, is among the lowest in the world. The government has long been afraid to raise it. Most scholars assumed it was a regressive tax. But the report states that "From a dynamic perspective, it should be considered a proportional tax, rather than a regressive tax." It concluded that "Savings will be different due to different types of consumption in the future. Raising the consumption tax rate, especially the luxury product consumption tax rate, is a fait accompli, given the imminent tax hike on wealth. It can improve tax efficiency. It can also reduce wealth inequality." Therefore the report recommended an appropriate increase in the consumption tax rate. Normal consumer goods can remain at the current rate of 5%. Taxes on luxury goods can be increased to 10%.

But part of the argument was flawed. As we all know, most income is used to consume. Most of the wealth of the rich is saved. They can even go abroad to shop. Raising the consumption tax merely takes more from the common folk. Therefore it is a regressive tax. That said, increasing the luxury tax is feasible, and will improve the government's fiscal situation.

We have a blueprint. Therefore we should act on it. We should don sword and sandal and solve the problem.

The national debt is a serious problem. Central government debt as a proportion of GDP is not high compared to other countries. But the hidden debt exceeds 24 trillion. The ROC government's debt level is as high as the PIIGS just before the European debt crisis struck, including the worst basket case -- Greece. The central bank contribues about 200 billion a year to the treasury. Without the central bank's contribution, the government's fiscal deficit would be serious. But allowing the central bank to contribute to the treasury is far from satisfactory. Central banks the world over do not bear such burdens. The Academia Sinica should propose a solution to this in the future.

The National Economics and Trade Conference will convene this weekend. We expect in depth discussions on these issues. The Ministry of Finance should consult these recommendations. It should offer specific responses and develop policy plans to implement the necessary reforms.

社論－經貿國是會議應討論稅改問題
2014年06月18日 04:09
本報訊

中央研究院日前發表《賦稅改革政策建議書》，提出財政收支赤字問題的分析，及稅制調整建言。召集人王平院士所領導的團隊經過將近一年的討論、分析及研究，提出我國賦稅3大問題、6大建議。這份報告，值得政府及社會各界重視。

我們欣然見到，國內最高研究機構中研院，不再不食人間煙火，能走入民間發揚淑世精神來經世濟民。文中提出6大建議雖未排出施政先後順序或提出具體時程，但可以做為未來政府施政的藍圖。

《建議書》中提到的3大問題：租稅負擔率12.8%（民國101年）為全球最低；薪資所得者稅負比重偏高，企業及資本所得稅負比重偏低，未稅所得過多；而且赤字沒有任何改善跡象，將愈形惡化，這些的確是當前我國財政問題最重要的病因。然而這些問題都行之有年，是整體社會長久以來結構性的問題。七年之病，求三年之艾，本不可得。

然而，我國租稅負擔率如此之低，企業課稅比重太低，而薪資所得者課稅比重偏高，交叉比對家庭收支調查報告，尤其清楚呈現問題的本質。

民國94年全國家戶數約710萬，同年的綜所稅申報戶數目約550萬，因此有近160萬戶，包括合法和非法，完全沒有報稅。550萬申報戶中每月家庭收入不足5萬元，家庭年總所得未達59.5萬元有將近400萬戶。剩下來150萬戶，約兩成的家戶，尤其屬於夫妻雙新的高薪家庭，負擔了絕大部分的國家稅收。台灣稅負不均問題真的非常嚴重。

針對企業及資本所得稅負比重偏低的問題，文中雖提到「我國所得稅基本上已經成為薪資稅的所得稅，相當高比例的非薪資所得被避掉或逃漏掉，因為台灣企業絕大半是中小企業，對於中小企業主的所得，即使是先進國家的稽徵機關也不容易掌握。」我們要指出，先進國家絕對沒有如台灣可以成為免稅樂園。中小企業幾乎都不繳稅，與所有的財務資料缺乏監督稽核，都是由記帳士，根據發票整理報稅，業主、所有家庭成員乃至他人消費全是由公司埋單。

這部分的改革，我們不能寄望象牙塔內的學者能有建樹，而是要靠稅務稽徵單位重新設計來亡羊補牢。

有關消費稅的討論及建議，是重中之重。我國的消費稅，加值型營業稅5%，在世界各國中是偏低的。過去一直不敢提高，因為學界普遍認為它是一累退稅。然而，文中指出「從終生動態觀點來看，它應是比例稅而不是累退稅。」認為「儲蓄會以不同型式的未來消費出現，提高消費稅的稅率、特別是高級品的消費稅稅率，就是對於既成事實的當下財富提高稅賦，它不僅可以增進租稅效率，也可以改善降低財富所得的不均度。」準此，文中建議適度提高消費稅之稅率，一般正常消費品可維持較低之現行5%稅率，廣義之高級消費品則課以較高如10%稅率。

然而這部分的論述是有瑕疵的。眾所周知，一般人所得多用來消費，富人所得大部分儲蓄起來，要消費還可以跑到國外。提高消費稅，從升斗小民挖去的更多，因此還是累退稅。不過提高廣義之高級消費品稅率還是可行的，有助財政改善。

既然有了藍圖，與其坐而言更應起而行。應劍及履及的開始解決問題。

國債問題已經相當嚴重，雖然中央政府債務未償餘額占GDP之比重，與其他國家比較還不算高，但如果加計隱藏性債務24兆，台灣的債務占比與歐債危機爆發前的歐豬五國，尤其最嚴重的希臘，並不遜色。而且央行一年繳庫約2000億，如果沒有央行的貢獻，我國財政短絀更是嚴重。但是，要讓央行負擔繳庫任務，實在不宜，全世界央行沒有負擔這樣的任務。如何解決，也有待中研院未來能提出對策。

本周末起，將召開經貿國是會議，我們期望會議可針對這些問題深度討論。而財政部應根據各項建議，具體的加以回應，並擬定施政的計畫，來改革相關的問題。