Might Taiwan Be the Second Greece?

The Fair Tax Reform Union Criticized the Minister of Finance Li for Being Irresponsible

2010-07-13

Ministry of Finance revised the bond law to increase loan limit for local authority when Legislative Yuan is preparing for upcoming bond law negotiation. The Fair Tax Reform Union convenes the press conference: “Taiwan might be the second Greece!” Regarding to this censure, the Minister of Finance Mr. Li Shu-Te refutes that this statement is too excessive. He also mentions that the obligation residue will reduce in 2014. The Fair Tax Reform Union reply on May 31: “It is definitely excessive, Taiwan is even more miserable than Greece. Greece can rely on Europe union to solve their debt but who will be our backup?” According to the Mr. Li’s refutation, they keep asking “You desperately cut tax in your term of service and bet the debt will decrease in the successor term. If the obligation residue will not reduce in the future, who should take the political liability?

The five metropolis’ debt amount could possibly reach 200% of the year annual expenditure in the future. The county municipal government’s debt amount also increase from 45% to 70% of the year annual expenditure. Spokesperson of Fair Tax Reform Union Chen Gene-Tzn pointed out that Taiwan government has the same problem as Greece who is suffering debt crisis now. The problems are the unfairness in cutting tax and forged account. Taiwan's current debt amount is calculated as about 14 trillion in accordance with the budget center in Legislative Yuan. (Including military, civil service retirement benefit obligation, insurance losses and potential liabilities for civil, labor and agricultural party and various non-profit funds and other long-term liabilities, etc). The amount has reached about 15 trillion in addition to nearly two years of spending. The debt balance is more than 116% of GDP.

Minister Li refutes this statement. “Government obligation residue is 4200 billion which occupy 32% of last three years’ average GNP and it is lower than the 40% legitimate limit. The obligation residue will reduce in 2014”he said. Minister Li also indicates that the concealed debt is the possible financial responsibility. If you really want to get the full scenario, you have to count that with the 22 trillion national assets.

The Fair Tax Reform Union responses Minister Li’s statement: “How do you calculate the 22 trillion national assets? Are all government-own lands included? "Review of central government accounts in 2008" reported by Audit Department said the hiding debt of government had reached 19.7 trillion. If we minus all debts from our national assets, we have less than 3 trillion asset. How could you say we have good financial stability? Minister Li said we have the world strongest finance few months ago but change to good financial stability today. Which statement can people trust?

The Fair Tax Reform Union point out that Taiwan’s tax revenues is historical low in 2009. The actual tax revenue is 2,652 billion less than the budget target. Compared to 2008 actual tax revenue, it is 2415 billion less in 2009. Tax Reform Union and 30 civil groups urge the government that we can’t approve local authority unlimited borrowing money in this severe financial situation. It will collapse our descendant’s future. The Fair Tax Reform Union calls on government insist the loan limit, increase the tax base and ask local authority assume the tax liability. Without excessive debt and squandering the future, we will be the last line of defense of our descendant’s future.