Taiwan To Pump $12B In Excess Tax Revenue Back Into Economy In 2023

Taiwan will pump an additional T$380 billion ($12.43 billion) in tax revenue back into the economy in 2023 to help shield the island from global economic shocks, including subsidies for electricity prices, President Tsai Ing-wen said on Saturday.

While the export-dependent economy expanded 6.45 percent in 2021, the fastest rate since it grew 10.25 percent in 2010, it is expected to expand much more slowly in 2022 and 2023, hit by global inflation woes, COVID-19 turmoil in China, and the impact of Russia’s invasion of Ukraine.

Tsai, in a statement from her office following a meeting of senior economic officials, said the government must arrange in advance for the “more severe challenges” the global economy encounters in 2023.

The estimated T$380 billion in excess tax revenues for the central government in 2022 will be spent on areas including labour and health insurance, subsidies for electricity prices, and other spending to deal with the impact of global inflation and international economic challenges, the president said.

Government departments will also conduct a review of future industrial development strategies, “especially the adjustment of the role and layout of the semiconductor industry and the information and communications industry in the global supply chain”, Tsai said.

This will help strengthen Taiwan’s main role in the global supply chain, and sustain the sustainable momentum of industrial development and economic security and stability, she added.

Taiwan is a key producer of semiconductors, used in everything from fighter jets to cars and smartphones, and home to the world’s biggest contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (2330.TW).

Taiwan’s central bank earlier in December lowered its 2022 estimate for gross domestic product (GDP) growth to 2.91% from its earlier forecast of 3.51% in September.

For 2023, it forecast GDP would expand by 2.53%, against a previous forecast of 2.9%. The economy expanded 4.01% in the third quarter compared to a year earlier.

($1 = 30.5770 Taiwan dollars)