TAIPEI: Tax reductions provided to companies that offer pay increases are only a short-term incentive, as the goal is to kick-start the process for long-term salary raises, said National Development Council (NDC) Minister Duh Tyzz-jiun.
Duh made the statement yesterday at the Legislative Yuan in response to Democratic Progressive Party (DPP) lawmaker Chen Ming-wen’s statement that a proposed package to revise four sets of laws — the Labor Standards Act, the Company Act, the Factory Act, and the Small and Medium Enterprises Development Act — to increase employee pay is in fact meant to cut taxes for corporations.
Duh stressed that while tax reductions are provided in a given fiscal year, pay rises are for the long term.
There is nothing wrong with the government incentivizing companies to provide raises. However, it is only rational for companies to do so if they are profitable, Chen said, adding that whether it is necessary for the government to provide tax credits needs further study.
The Kuomintang (KMT) party-backed amendment aims to give the government more teeth in enforcing regulations that require listed companies to follow through with their profit-sharing plans.
The revision package is drawn up in reference to laws adopted by Japan and South Korea, Duh said. By adjusting the laws and providing tax cuts, the government hopes to “ignite” the pay raise process.
Duh said that salary levels have stayed stagnant in many Asia-Pacific countries largely because of a transformative shift in the local industrial structure. Taiwan has been long plagued by stagnant wage growth. Measures to encourage raises are only a short-term solution.
Only by making changes to the industrial structure can Taiwan resolve the wage growth problem in the long run, Duh said.
