On August 19, 2026, President Ching-Te Lai announced another universal cash payment of NT$10,000 for 2027, sparking public debate over how the government should use surplus tax revenue. Shian-Ming Lien, President of the Chung-Hua Institution for Economic Research (CIER), said Taiwan’s tax revenue has risen rapidly in recent years. Allocating part of the surplus to social insurance programs, including Labor Insurance, National Health Insurance, and the National Pension, would help improve income distribution, intergenerational equity, and social stability. However, intense political competition often leads policymakers back to cash payments, which deliver the most visible benefits to voters. A more important policy question is how to convert additional fiscal resources into public spending that generates long-term benefits.
Tax Revenue Rises by NT$1.3 Trillion in Five Years, Highlighting the Need to Consider Long-Term Benefits
Lien said Taiwan’s government tax revenue rose from approximately NT$2.4 trillion in 2020 to NT$3.7 trillion in 2025, an increase of about NT$1.3 trillion over five years. This substantial growth has also helped address Taiwan’s persistently low tax-to-GDP ratio. As the development of the AI and semiconductor industries drives economic growth and increases tax revenue, the government’s allocation of these additional resources will affect income distribution, intergenerational equity, and Taiwan’s future industrial competitiveness.
Beyond short-term cash payments, surplus tax revenue could be invested in public infrastructure and social insurance. Fiscal constraints have historically limited some of Taiwan’s public infrastructure to meeting only basic needs. However, climate change, the energy transition, and population aging require not only more infrastructure but also higher-quality and more resilient infrastructure. Transportation, energy, water resources, and urban environments all require sustained investment.
AI-Driven Revenue Growth Creates Opportunities to Fund Social Insurance
Lien recommended allocating part of the surplus tax revenue to Labor Insurance, National Health Insurance, the National Pension, and other social insurance programs. Unlike one-time cash payments, such spending may not deliver immediate political gains. However, it could improve income distribution, intergenerational equity, and social stability over the long term while easing the fiscal pressures arising from demographic change.
Lien noted, however, that investing additional fiscal resources in public projects with higher long-term returns may make economic sense but may not represent a politically viable equilibrium. Political polarization is high in Taiwan. The ruling party tends to direct resources toward central government policies and major infrastructure projects, while opposition parties may advocate increasing funding for local governments. These competing priorities can easily produce disagreements over resource allocation, as demonstrated by recent disputes over the distribution of centrally allocated tax revenue.
Lien therefore believes that the real challenge is not whether the government has sufficient funds, but how to build consensus on the long-term use of surplus tax revenue. Ideally, the ruling and opposition parties could establish basic allocation principles for surplus revenue. The government could use one portion to meet current policy needs, while steadily directing the remainder toward social insurance or public investments that generate long-term benefits.
“Cash Payments” Deliver the Most Visible Benefits amid Political Competition, While Consensus on Long-Term Public Investment Remains Elusive
Lien said cash payments often become the preferred policy option in a highly competitive political environment because the public can experience their benefits directly. By comparison, improvements in the financial sustainability of social insurance or the resilience of infrastructure may take years to become apparent. As a result, the ruling and opposition parties may struggle to reach a consensus even when long-term investments offer higher social returns.
Lien said the use of surplus tax revenue is fundamentally a policy choice between delivering immediate, tangible benefits to the public and advancing long-term national development. Establishing bipartisan principles for fiscal allocation and directing part of the additional revenue toward social insurance and public infrastructure could more effectively transform the fiscal dividends of economic growth into long-term resilience. This would better prepare Taiwan to address population aging, the energy transition, and climate change.
Source: Economic Daily News (August 19, 2026). President Lai’s Proposal for Another NT$10,000 Universal Cash Payment in 2027 Sparks Debate; Shian-Ming Lien Suggests a Better Use but Says Bipartisan Consensus Is Unlikely. Economic Daily News. https://udn.com/news/story/7238/9701601