The Taiwan Banker

Problems that can be solved by money are not the most serious problems. This year, tax revenue for the whole year exceeded the amount scheduled to be received at the beginning of the year. The good fortune of too much money has caused debate about excessive taxation, turning wealth itself into a problem. I hope that Taiwan’s financial awareness can improve following the controversy, and that expectations of the government for fiscal discipline can become more mature. The origin of the surplus was the budget review procedure which was sent to the Legislative Yuan for review last August. When budget estimates are made each April and May, revenue for the entire following year must be forecast. Given the trade war, the pandemic, and the war in Ukraine, international organizations and economists were pessimistic about Taiwan’s economy, so the government also relied upon conservative tax revenue estimates to prevent a deficit. Fortunately, due to Taiwan’s impressive industrial performance, last year’s business tax and the securities exchange tax of the previous year raised more revenue than expected. But should this money be fully distributed to the people? The answer is of course no. Many countries in the world currently have serious fiscal deficits. Taiwan’s most important priority is to strengthen its social safety net, taking advantage of the opportunity to reinforce its labor and health insurance so that it can face the impact of a declining birth rate or economic recession on income. Similarly, in the 1970s, Norway used the income from its North Sea oil fields to build a sovereign fund for its next generation, rather than implement populist tax cuts or build extravagant but useless infrastructure. Regarding our rare financial fortune over the past couple of years, it is a pity that some people have advocated for tax money to be paid out to the people. This is the tragedy of Taiwan’s finances: some people think that there is a person called the government, forgetting that the government is us; its debts and surpluses are our own. The money over which we quarrel does not in fact come from the purses of officials, but rather from our own future wallets. As the pandemic ends, people and industries across Taiwan will require support and assistance. International energy prices have soared, and without subsidies, many people have lost a major portion of their income. This all requires the government to distribute its “financial fortune” so that those who encounter bad luck will not be too miserable. If there is any positive meaning to the present controversy, it is to link people’s pocketbooks more closely with the government’s finances. In the future, when there is a fiscal shortfall, everyone will need to contribute to the treasury. Following several years of financial misfortune, the urge to soothe people using cash is understandable, but we should remember that the winds change. The true meaning of fiscal discipline is to invest in the right projects to make Taiwan more resilient in the face of future financial misfortune.