Thursday, December 18, 2014

Thursday stuff: our first joy from Eric Chu

Whatever you read today, don't miss this review of the disaster that is the Taoyuan Metropolis project. The project is going to be reviewed by the DPP County chief. It is a construction-industrial state giveaway, and will likely survive, slowed, but continue to move forward, eating good farmland, another example of Taiwan's most important form of alchemy, using public laws to convert private land into public projects that are private gold.

Todays news was the story of netizens busting New Taipei City mayor and incoming KMT Chairman Eric Chu for appointing the head of the KMT party investment organ to be the new legal affairs commissioner for New Taipei City. has the translation (Apple Daily in Chinese)...
The Kuomintang’s financial interests are massive and complex and pose a huge problem for the presumed future party chairman, New Taipei City Mayor Eric Chu. Having led off by saying the party needs more “Hiroki Kurodas” [low-key players who aren’t stars but work hard and contribute a lot to the team] he has quietly brought at least one such figure into his city Cabinet to help him out.

Among the Cabinet members announced by the city days ago was new Legal Affairs Department Commissioner Huang Yi-teng 黃怡騰, who has previously served as chairman of the board of the “Central Investment Company” 中央投資公司 [no official website or English name], the biggest KMT-run enterprise. New Taipei’s official announcement omitted this sensitive information, which was later exposed on Facebook by famous political commentator Chung Nien-huang 鍾年晃.

While attending an event for the publication of a book of inspirational true stories of New Taipei schoolchildren this morning, Chu stated that he at first didn’t know this about Huang, and only knew Huang had been a city government consultant for four years, a member of the Petitions and Appeals and the Legal Affairs committees, and former chief secretary of the Consumers’ Foundation. Chu explained that he has since asked about this issue and found out Huang’s law firm had been hired by the KMT’s asset holding company; Huang served in this post as a representative of his firm; and the management of party assets was not his chief work responsibility.
Chu didn't know that the guy he hired was the former Chairman of the Board of the KMT's investment organ? As said, "journalists are incredulous." Just an example of the heightened scrutiny that Chu is going to face every day, with the added joy of an army of netizens examining every move. Everyone I know was having a good laugh about his assertion that clean government is the foundation of the KMT -- I guess foundation in the sense of something you build your house on, and never see again. observes of Eric Chu's "reformist" move toward a parliamentary system. Read it all, but note:
Though Chu says amendments “should not involve partisan biases and personal calculation,” it’s easy to see that this amendment is in the immediate interests of both him and all the legislators who are pushing it. It’s silly to ask legislators if they’d support a parliamentary system. Of course they would! Then they could be the clear foundation of political power and be able to make and bring down executives by themselves. And Eric Chu? This week has shown that the legislators are his power base in the KMT, and surely he’d love everyone to think he’s a creative reformer without having to first survive life-and-death battles with entrenched interests in the KMT over party assets, compradors, and so on.
Frozen Garlic figures out how a parties could game a mixed member system to produce majorities.
However, what if the KMT or DPP cynically set out to create overhang seats? Could they crash the system? Let’s go back to the first MMP example, where Party A won 76 district seats and only 4 list seats. What if Party A decided that 4 list seats wasn’t enough for their 40% list votes? What they could do is to form a fake party called Party A*. All of the district candidates would run under the Party A* label, and all of the list candidates would run under the Party A label. Now let’s look at the table...:
As Froze notes, this system already exists in embryo form with all the gangster and far right parties allied to the KMT. It would just require that the KMT support them. The Taiwan propensity for gaming any system of rules ("if it has rules, it must be gamed") which is responsible for so much of the bureaucratization and inefficiency of Taiwanese institutional governance, guarantees that if such a thing is possible, someone, most likely the KMT because it has the resources, will trash the system.

In some ways more important than the political moves was the news that the legislature had put off the capital gains taxes for a tiny proportion of traders until 2018. Note the numbers:
Minister of Finance Chang Sheng-ford (張盛和) and Financial Supervisory Commission Chairman William Tseng (曾銘宗) agreed on a three-year moratorium after some bargaining to save what Chang called “the last breath for fair taxation.

The “active trader” clause is part of the income tax law under which individual investors who sell more than NT$1 billion of local shares a year have to pay either a 15 percent tax on stock gains or an extra 0.1 percent tax on transactions in excess of the threshold.

“Let time judge if the clause is really in need of revision... It is better to leave it intact for the time being,” Chang said.

According to the ministry, only 1,243 individual players would meet the threshold and 47 percent currently pay income taxes of less than NT$25,000 a year, accounting for a tiny 5 percent of gains.
Yeah, read that last paragraph again. Apparently nearly half the individuals who trade a billion NT worth of stock each year, pay less than $25,000 in income taxes. Why is there so much income inequality in Taiwan? Because the economy and tax system are arranged that way. And no one on top wants to change them. This is the challenge for the DPP -- it can't just play the social justice party every four years. It actually has to do something meaningful on this.
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les said...

It was Hau Bo-tsun who (back in the day) famously declared that there's nothing honorable to be doing outside past 11pm and all good citizens should be at home in bed at that hour. He missed the days of martial law and curfews so much. You should not assume he's just some grumpy old man. He's always been an authoritarian bastard, it's not the product of old age.

Michael Turton said...

Oh sure. But I want to see more of him out there...

les said...

Oh I agree, these old fools are some of the opposition side's best friends in an election year.

Anonymous said...

Hey Michael, just want to say thanks for keeping us informed. Even if your posts get 0 comments, I am sure everyone appreciates all the effort that you put into VFT. Keep up the excellent work.

Michael Turton said...

Thanks! I really appreciate comments like that!


Cary said...

I'd just like to second what Anonymous said. After many years, you remain my go-to to get a taste of what's going on in Taiwan, with great links leading to in-depth sources for further understanding.

I'll just add that if you ever decide to have a fund-raiser, I'm in.