The government announced yesterday that it will roll out consummer vouchers valued at NT$3,600 to every citizen by taking out loans equaling NT$82.9 billion (US$2.5 billion) to produce 0.64 percent economic growth for the country next year.
“In view of the impact of the global financial crisis, which continues to grow and might last for quite a while, along with declining consumption, the Executive Yuan has decided to issue consummer vouchers to invigorate the economy,” Premier Liu Chao-shiuan (劉兆玄) told a press conference yesterday afternoon.
Under the plan, by Lunar New Year on Jan. 24 each citizen can receive vouchers worth a total of NT$3,600 from his or her household registration office by showing documents that prove citizenship.
PHOTO: CHIEN JUNG-FONG, TAIPEI TIMES
The expiration date of the vouchers will be Dec. 31 next year, while the face amount of each voucher note has yet to be determined.
Liu said that the program did not exclude the wealthy because it is designed to “stimulate more consumption to get the economy going” and “not to provide social assistance.”
“Wealthy people or people who are not in need of the vouchers can get a tax break by donating the vouchers to charities,” Liu said.
The government expected to see an increase of 0.64 percent in next year’s GDP based on the assumption that all the vouchers are used to purchase goods and services and are not converted to cash and deposited in bank accounts.
Council for Economic Planning and Development Chairman Chen Tian-jy (陳添枝), also present at the press conference, said the consummer vouchers were confined to legally registered businesses.
Chen said businesses would be required to write down each voucher number on the corresponding invoice or receipt so that the government could check whether the voucher had been used for goods and services and not for acquiring cash.
The government will write a special law for the program as borrowing the funds will conflict with Article 23 of the Budget Law (預算法), which states that funds raised by loans must be used in capital investments and Article 4 of the Public Debt Act (公共債務法), which places a debt ceiling on loans.
“We need a special statute to issue the consummer vouchers so that we can bypass Article 23 of the Budget Law and article 4 of the Public Debt Act,” Chen said.
Asked how the government measured the burden of the loan that future generations will need to bear because of the move, Liu said that the priority of the government was to rejuvinate the economy.
“It’s a difficult time. Issuing purchase vouchers and other similar measures have been adopted in other countries. These measures would not be used in normal circumstances. If we could sail through this economic depression, it would be easier for the government to deal with other problems. If we do not do this [issue the vouchers], there will be even harsher consequences,” Liu said.
Liu said the government was also planning to take out loans to increase investment in public works and to boost industries, with details to be finalized in the coming weeks.
At a separate setting yesterday, Legislative Speaker Wang Jin-pyng (王金平) said he hoped the vouchers could be distributed to people before the Lunar New Year. But he said it might take a while for the legislature to pass the special bill proposed by the Cabinet to legitimize the policy.
Nevertheless, Wang urged the Executive Yuan to show the government’s determination in executing the policy now that it had proposed the plan to boost the economy.
Chinese Nationalist Party (KMT) caucus deputy secretary-general Lo Shu-lei (羅淑蕾) yesterday vowed full cooperation in pushing through the special legislation as soon as possible, adding that the Cabinet’s policy could serve as an incentive to boost public consumption.
Lo said the government had no alternative but to boost the economy through loans, adding that other nations had taken similar measures to revive their economies.
KMT Legislator Lai Shyh-bao (賴士葆), a member of the legislature’s Finance Committee, said the government’s plan could ensure individual equality as the vouchers would be granted on an individual basis instead of a household basis.
Voicing its opposition however, the Democratic Progressive Party (DPP) caucus yesterday said the government’s allocation of a special budget to fund the vouchers would incur unnecessary debt.
Legislator Tsai Huang-liang (蔡煌瑯) told a press conference that “people should know that when a person receives NT$3,600 in coupons, the next generation will have NT$3,600 in debt.”
The KMT administration has already allocated NT$300 billion to source its 12 major construction projects in debt financing, and it proposed an NT$82.9 billion budget for the coupon plan, so the government will have around NT$400 billion in debt financing only six months in office, Tsai said.
The government allocated a special budget to avoid the public debt limit regulation, but the expanding debt financing might bankrupt the country or leave hung debts to the next generation, he said.
DPP Legislator Yeh Yi-ching (葉宜津) said that a tax refund or cash subsidy would be a better way to stimulate consumer spending.
The DPP caucus proposed a tax refund bill to the legislature in June, however the KMT caucus refused to review the bill.
Also See: EDITORIAL: Coupons and policy on the run、More stimulus needed: analysts
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