Land grabs, tax breaks give hi-tech unfair boost

     The way the government handles the Central Taiwan Science Park Erlin campus project is important because it involves key practical and legal issues. Therefore the project needs to be undertaken with due care.

     First, many of the listed benefits of science parks are the stuff of myth. According to the Control Yuan’s financial reassessment no. 0023, released last year, for every NT$1 billion (US$33.4 million) invested in the technology sector, only 6.4 jobs were created, compared with 16 new jobs generated for every NT$1 billion invested in traditional industries. Evidently, money invested in the sector is of limited value in terms of job creation.

     The reassessment also pointed out that hi-tech industry benefits from a large number of tax breaks and the actual tax rate tends to be lower than it is for traditional industries. Taking the year 2004 for example, the effective tax rate for the hi-tech industry was 5.8 percent, far lower than the 14.8 percent leveled on struggling traditional industries.

     The reassessment then says that the average electronic components manufacturer pays NT$2.4 million in taxes with 1,320 manufacturers from that industry cluster applying for tax exemptions, netting savings of almost NT$70 billion. This is before the high costs of pollution and other social costs have been factored-in.

     Second, land expropriation and diversion of irrigation systems have got out of hand and the government needs to put a stop to them. The Erlin campus — apart from being founded on the aforementioned myth — was initially constructed with AU Optronics Corp (AUO) in mind, which had indicated it would take up a considerable amount of space in the park.

     In Taiwan, private property is protected under the Constitution and the revocation of the right to private property needs to be handled judiciously and stringently in line with legal conditions.

     The primary requisite for land expropriation is for it to “further the public interest.” That being the case, I would like to know what benefits the public gets from the National Science Council’s (NSC) transition plan? How are things to be prioritized? Will the limited number of companies that have expressed an interest in moving into the park be sufficient? Also, the amount of land being expropriated depends on the requirements of the companies involved, in the same way their need for water is calculated. These are all calculated on a proportional basis, so how is it that AUO’s operational requirements can be applied to the tiny number of firms still expressing an interest in moving there?

     Another issue is how the Environmental Impact Assessment is to be addressed. The legality and proportionality of the transition plan has, frankly, been found wanting.

     Finally, the public is becoming increasingly aware of the excessive number of land appropriations that are happening across the country. The Academia Sinica’s Research Center for Humanities and Social Sciences and National Chengchi University’s Election Study Center recently carried out a major social justice research project. The results of the study show that as many as 75.6 percent of respondents believed that the government failed to use the expropriated land according to the initial plans and another 70.8 percent thought that the government’s expropriation of farmland for the construction of plants and factories fell short of being reasonable. These are high percentages and the government would do well to take note of them.

     I would recommend the Cabinet and the NSC halt the ongoing project for the time being. There is no urgency to keep building. We ought to discuss together what steps should be taken to move forward.

Translated by Paul Cooper

Published in The Taipei Times, 2012/06/24, p. 8.