TAIPEI: The government will consider raising taxes only after the domestic economy takes a turn for the better, chief of finance Lee Sush-der said yesterday.

He made the remarks a day after the "Ministry of Finance" (MOF) unveiled a package of mid- and long-term measures to improve government finances.

Among them was a plan to raise the business tax rate by 1 percent in 2013 - a proposal that has given rise to public concerns over tax increases.

Responding to media inquiries, Lee said tax increases can be carried out by broadening the tax base or raising tax rates.

More importantly, Lee said, tax increases should not be implemented until the time and general circumstances are right.

"The economic situation, the general business climate and public opinion should all be factored into any proposals for tax adjustment," Lee stressed.

Touching on the newly unveiled tax reform package, Lee said the government will promote a series of fiscal reforms to ensure its financial health and viability.

"We believe when the economy bottoms out in the current recession and regains upward momentum, the government will be able to collect more tax revenues to finance major infrastructure construction projects for the well-being of the public," he added.

According to the MOF-drafted package to improve government finances, the government coffers will be able to post an additional surplus of NT$1 trillion ($30.864 billion) in eight years by trimming uneconomical expenditure and increasing revenues.

The package outlines three key measures to realize that goal - streamlined financial management, taxation management and property management.

Announcing the new package at a news conference Wednesday, Lee said the government has incurred huge debts over the past decades due to increased expenditure and shrinking revenues.

"We need to trim uneconomical spending and expand income sources to address the government's financial problems and maintain its financial viability," Lee said.

On financial management, the new package sets the goals of balancing regular expenditure and revenue; using current account surplus to finance capital expenditure; keeping outstanding debts within 40 percent of the average GNP for the previous three years; and limiting annual borrowing to a maximum of 15 percent of the central government's combined annual regular and special budgets.

On taxation management, the goal is for Taiwan's tax burden ratio to remain above the 14.3 percent recorded in 2008.

On government property management, it aims for the utilization rate of government-owned land plots for non-public use to be at least 50 percent.

The package also outlines 10 strategies for realizing those goals. They include upgrading the government's fiscal efficiency; helping local governments improve their finances; streamlining government debt management; reinforcing financial planning for major public infrastructure construction project; promoting tax reform and customs service reform; updating all tax-related information; streamlining management of the government's stock holdings and property; and developing large government-owned land plots for commercial use.

If all government agencies cooperate closely to carry out these 10 measures, Lee said, the public treasury will rake in an estimated NT$1 trillion in additional income between 2009 and 2016, which would translate into an average of about NT$125 billion per year for that period.

China Daily/CNA

(HK Edition 09/25/2009 page2)