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United Daily News: Low tax rates won't bring 'golden decade'

United Daily News: Low tax rates won't bring 'golden decade'

The inking of a tariff-cutting economic cooperation framework agreement (ECFA) between Taiwan and China has stirred up a sense of crisis of Japan, South Korea and Singapore. Premier Wu Den-yih has said repeatedly in recent speeches that thanks to the ECFA and a lower corporation income tax rate than neighboring countries, Taiwan will be able to create a "golden decade." But such one-sided wishful thinking reflects a lack of vision on the part of the government. Could Taiwan reap benefits if other countries also resorted to slashing corporation income tax rates? Taiwan is doomed to fail if it seeks to compete with tiny states in tax reduction, as international data shows that small countries like Singapore and the Cayman Islands, which have no defense needs, are more suited to lure investment through tax breaks.
If the government only thinks about cutting taxes without considering the effect on government expenditure, it will be extremely hard for the country to make ends meet. Premier Wu needs to reconsider and come up with a well-balanced and comprehensive policy.
(July 17, 2010).
(By Flor Wang)