Brian Hioeby Brian Hioe
語言:
English
Photo Credit: Lai Ching-te/Facebook
TAIWAN REPORTED RECORD-HIGH tax revenue for 2024, with 3.73 trillion NT in taxes collected. This is a larger windfall than expected, in that there were 497.2 billion NT more in taxes than budgeted for by the government. The extra revenue is due to strong exports, as well as stock gains because of market enthusiasm about artificial intelligence.
The tax windfall raises questions as to why the KMT currently seeks to drastically cut the government budget. Though the KMT claims that this is in the interests of fiscal balance, there is little demand for drastic austerity in Taiwan that would impact not only Taiwan’s defense budget, but its social services.
At present, the KMT aims to cut around 34% of funds available to the government. Though the KMT has defended itself that this is only around a 6% cut to the overall budget, what is important to note is that the government cannot touch funds to pay salaries for civil servants, as well as subsidies from the central government to local governments. As such, it is the available operation funds to the government that will be cut. These budgetary cuts are the largest cuts in Taiwanese history, larger than cuts during the Chen Shui-bian administration.
Indeed, the KMT seems to recognize that this tax windfall is a stumbling block for their assertions about the need for government spending. Consequently, the KMT has called for this extra revenue to be returned to the public in the form of cash hand-outs.
This would be a typical idea from the KMT, which has sometimes distributed cash hand-outs to the public as part of ploys to win votes. Cash hand-outs have often targeted older voters who are the KMT’s traditional base.
Lai Ching-te. Photo credit: Lai Ching-te/Facebook
By contrast, Lai Ching-te has stated that the extra funds will be used for social services such as childcare, tuition subsidies, and efforts to fight cancer. Lai has also stated that such funds will be used to bolster industry, in maintaining a stable electricity supply for AI technology development, as well as to cultivate talent.
This claim takes place in the same timeframe as Lai stating that he would raise Taiwan’s defense budget to 3% of GDP by proposing a special budget. This move is likely to be resisted by the KMT, which would frame Lai’s actions as executive overreach, though Lai is aiming to get around how the cuts to funding also impact defense spending in cutting key programs such as drone development and Taiwan’s domestic submarine program.
One notes that the Taiwanese public generally enjoys the quasi-welfare state that Taiwan currently has and would be upset to see cuts to social services. The actions of the Trump administration, in threatening to suspend support for Taiwan unless Taiwan increases its defense spending, may also lead to concerns about the KMT’s actions.
The KMT’s actions are likely motivated by the fact that attacking government spending in the name of efficiency or fiscal balance is the easiest way to seize control of institutions. It is important to note that with Taiwan set to head to a constitutional crisis in the near future, one of the key issues at hand is the KMT’s efforts to seize the authority to draw up the budget to the legislature from the executive branch of government, as well as to freeze the Constitutional Court in order to prevent constitutional interpretations from blocking its actions.
The KMT is likely to grasp for other rationales than claiming a lack of government funding to justify its actions, then. Perhaps the KMT may try to lean into neoliberal claims that citizens should be given government hand-outs, rather than that the government provides subsidized social services. But simply handing out 10,000 NT to citizens is not going to pay for healthcare, pensions, or other basic services such as public transportation, stable electricity, and Internet.
The KMT’s claims to care for fiscal balance are also undermined by the fact that the KMT previously called for three infrastructure proposals that would have spent many times more than the amount saved through its cuts, in a manner that would have crowded out infrastructure spending for other projects. Yet the KMT is leveraging on the lack of knowledge by the public about government fiscal planning, as well as the system of checks and balances enshrined in the constitution to make its claims.