1. What is an excess tax collection? Is it illegal for the government’s audited annual revenue to be higher than the budgeted amount?

Answer:

(1)The so called “excess tax collection” in fact just means that the audited (actual) number is higher than the budgeted number.

(2)The annual revenue of the government include tax and non-tax revenues. An annual budget revenue is just an estimate of the nation’s revenue. The actual execution of the budget may yield more or less than the budget. It is a regular state, and it is not illegal.

 

2. What are fiscal surplus and fiscal deficit? Are we running fiscal surpluses?

Answer:

(1)A fiscal surplus refers to the annual budget revenue are higher than the annual budget expenditure; conversely if the annual budget revenue are lower than the annual budget expenditure, we have a fiscal deficit, or annual revenue falling short of annual expenditure.

(2)Since FY2001, the central government has executed its general budgets with surpluses in 9 fiscal years, including FY2006 to FY2008 and FY2017 to FY2022. Fiscal deficits prevailed in all the other fiscal years.

 

3. What is the impact of actual tax revenues being higher than the budget?

Answer:

(1)It raises annual revenue.

Tax revenues are a main source of annual revenue. All dollars that tax collecting agencies have collected based on tax laws--whether higher or lower than the budget--must in their entirety be reverted to National Treasury for its general use and be included in the final accounts, according to the Budget Act. If the annual tax revenues are higher than the budget, it will help increase the overall annual revenues.

(2)It shrinks the fiscal deficit.

The total budgeted revenues of the central government have long been inadequate to cover all the budgeted expenditures. That has meant budget deficits, and government borrowing has been necessary to cover the shortfalls between annual revenue and annual expenditure. Due to the outperformance in tax collections in recent years and underspending in annual expenditure, budget shortfalls between annual revenue and annual expenditure has been gradually shrunk.

(3)It reduces the borrowing for that fiscal year.

Outperformance in tax collections in recent years and underspending in annual expenditure have shrunk the shortfalls between annual revenues and annual expenditures, which in turn has meant lower borrowing to bridge the gap. Because we are borrowing less, actual borrowing is lower than budgeted borrowing, the speed of rise in national indebtedness has been slowed.

 

4. Is fiscal management for government the same as that for the private sector (families or businesses)?

Answer:

Government annual revenue and annual expenditure must be reviewed and approved by people’s representatives--the Legislative Yuan--before they can be executed. To be in compliance with the budgetary regulations, final annual expenditures may not exceed budgeted annual expenditures. Therefore, even when annual revenue has exceeded the budget amount, annual expenditure must still not exceed the budget. Unlike the private sector, where flexible adjustments to revenues and expenditures are possible, government’s annual expenditure may not be raised at will.

 

 

5. The fiscal numbers in government’s announcements have shown discrepancies. Why?

Answer:

(1)The budget and final audit accounts process includes three stages: budgetary year preparatory operations, the execution of annual budgets, and final audit accounts, which span close to two years.

(2)National Treasury Administration periodically and from time to time publishes information about our nation’s fiscal revenues and debts. Announced numbers are often based on different cut-off dates, so they often seem to show discrepancies. That is not inconsistent.

 

6. When actual tax revenues exceed the budget, part of the excess is used to lower borrowing. Does that action comply with the budgetary regulations? Can the Legislative Yuan monitor that activity?

Answer:

(1)To strive for balanced revenues and expenditures, it is in compliance with the Budget Act to reduce borrowing when tax revenues are higher than expectation.

(2)Government budget compilation and execution are carried out in strict compliance with the Budget Act and the Financial Statement Act and are monitored by auditing organizations and people’s representatives.