KMT’s Hung proposes tax- deductible increase in wages to boost growth
Kuomintang ( KMT) 2016 presidential candidate Hung Hsiu- chu ( ) proposed tax-deductible wage increases yesterday in a policy outline designed to bring the island out of its economic doldrums.
Hung proposed the “increase workers wages, corporate tax rebate” at the party’s National Policy Foundation think tank, which is headed by KMT Chairman Eric Chu. Under a three-year staggered rate scheme, small and medium-sized enterprises could apply for rebates amounting to 200 percent of the value of wage increases applied to entrylevel employees in the first year. During the second and third years, the rebate rate would be adjusted to 160 percent and 130 percent, respectively.
For example, a company raising the wage of a worker by NT$10,000 annually could file for a rebate of NT$20,000 in the first year, NT$16,000 in the second year and NT$13,000 in the third.
A tax rebate for businesses would also apply for those who hire unemployed people under the age of 29, equaling the wage multiplied by 150 percent. Hung stated that unemployment rates for 20- 24 year old workers stands at 12 percent, while exceeding 6 percent for those aged 25-29.
Hung said the measures were common sense and address the economic downturn, and that the way to increase domestic consumption is to increase wages.
KMT Legislator Lai Shyh-bao ( ) called on the Democratic Progressive Party (DPP) not to block the proposal for “electoral considerations.” He noted that the recently passed laws to promote wage increases ( ) authored by the KMT had specific articles addressing the plight of small and mediumsized firms, but were hence blocked by the opposition party.
The government released disappointing figures at the end of last week showing that economic growth rates would slow into next year.
DPP Derides Plan
Meanwhile Shih Ke-he ( ), the DPP’s deputy of policy administration, said that scholars have already discounted the efficacy of tax-reduced wage schemes. Shih quoted Academia Sinica academician and former National Science Council Minister Cyrus Chu ( ) who said such ideas were “lazy and populist” in orientation. Shih stated that Hung’s proposal may lead to “fake wage increases and real tax cuts,” and that government moves to decrease corporate taxes are not an appropriate means to increase wages.
Shih said that the DPP’s plan for addressing wage increases involves addressing and “upgrading” Taiwan’s production structure in order to escape wage stagnation. He indicated that the recent wage increase laws passed by the ruling party would probably lead to little change for entry- level wage earners, but would instead see increases for managers who will use loopholes to increase their own earnings.
Kuomintang (KMT) presidential candidate Hung Hsiu-chu ( ) is shown at a press conference at KMT party headquarters, yesterday. Hung proposed further tax breaks for businesses that increase wages for their employees on Sunday.