Weak taxation and constraints of the welfare state in democratized Taiwan

• Published in: Japanese Journal of Political Science Vol. 19; no. 3; pp. 397 - 416
• Main Author: Lin, Chenwei
• Format: Journal Article
• Language: English; Japanese
• Published: Cambridge, UK Cambridge University Press 01.09.2018; Cambridge University Press (CUP)
• Subjects: Advocacy; Aging; Bargaining; Civil society; Constraints; Credit policy; Economic development; Economic models; Expenditures; Families & family life; Identity; Identity politics; Long term care insurance; Long term health care; Long-term care; Political activism; Political parties; Political science; Politics; Population; Power; Reforms; Services; Society; Tax rates; Tax reform; Tax revenues; Taxation; Taxation and Welfare Since the Third Wave of Democratization; Welfare; Welfare services; Welfare state; Japan; Taiwan
• ISSN: 1468-1099; 1474-0060
• DOI: 10.1017/S146810991800021X

The relationship between taxation and welfare regime in Taiwan has largely been unexplored to date. This study argues that since taxation capacity of the state decides the fate of new welfare programs such as the public provision of long-term care, it also affects the trajectory of the welfare regime. Through the analysis of Taiwan's tax revenue structure and tax base, this study reveals that Taiwan, unlike many new democracies, has shone away from relying on goods and services taxes but at the same time continues to provide preferential tax treatment for the corporate world. The result has been the erosion of tax base which makes introducing new welfare programs extremely difficult even when new policies allow for credit-claiming. Therefore, the familialistic welfare regime persists because of a weakened taxation capacity. Furthermore, the political determinants of the weakened taxation capacity can be found in identity-based party politics, an influential capital vs acquiescent labor and the limited bargaining power of civil society.