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May 27, 2017

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Ministry may ax subsidies, tax exemptions for law-violators

TAIPEI, Taiwan -- Lawmakers recently requested that the Ministry of Economic Affairs revise the Act for Industrial Innovation (產業創新條例) and slash subsidies as well as tax exemptions for law-violating companies, after Advanced Semiconductor Engineering Inc. (ASE) was found dumping untreated wastewater into Kaohsiung's Houjin Creek.

According to local reports, the Ministry of Economic Affairs (MOEA) has already completed a draft bill that requires the government to bar companies that have seriously violated environmental, labor and food safety regulations from subsidies and tax exemptions, while firms that are already receiving the benefits will see their benefits discontinued if they are found to have seriously violated the above-mentioned regulations.

Several lawmakers expressed concern over whether or not the legislative revisions will be retroactive. In response, an official with the MOEA reportedly said that tax exemptions can only be applied for after a company makes an investment, while the draft bill does not stipulate that the government can reclaim money, previously accrued from subsidies and tax exemptions, from the firms.

NGO Response

Nongovernmental organizations urged the government to devise protective measures for whistleblowers, so that employees of law-violating companies can report their companies to the authorities without fear of reprisal.

Taiwan Labor Front Secretary-General Sun Yu-lien (孫友聯) said that despite the string of scandals involving ASE and Chang Chi Foodstuff Co., the government has yet to launch active measures in order to encourage more employees to blow the whistle on their companies.

A lot of countries across the world, such as the U.S., Canada, South Korea and Japan, have such measures in place, Sun added.

Economic activities include production and waste disposal, neither of which can be disregarded, Taiwan Environmental Protection Union chief Lee Cho-han (李卓翰) said.

The government subsidizes enterprises, helping them make a profit; however, the cost of externalities such as pollution caused by the enterprises end up being shouldered by the average taxpayer, Lee said.

Having retroactive regulations is not about reclaiming money, Lee said, adding that the purpose is to return the polluted environment to its previous state.

Citing the case of ASE, Lee said that although the company has pledged to invest at least NT$100 million on environment protection every year for the next three decades, the question is whether or not the damage caused to the environment can be repaired with NT$3 billion.

A lot of companies are now talking about corporate social responsibility, but corporate social responsibility is something that comes after abiding by the law, Sun said.

Firms that disregard their basic responsibilities of abiding by the law do not deserve subsidies, Sun stressed.

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