Premier Liu Chao-shiuan (劉兆玄) yesterday called for an all-out effort by government officials to prevent this year’s economic growth from dropping below minus 2.97 percent.
While addressing government staffers at a conference, the premier said it would “not be easy” for the government to achieve the goal amid the current global economic climate.
“Everyone in the government should do his or her best and push limits,” Liu said.
On Wednesday last week, the Directorate-General of Budget, Accounting and Statistics said the economy contracted a record 8.36 percent in the final quarter of last year and was expected to shrink by a record 2.97 percent this year. Liu on Tuesday promised to reshuffle the Cabinet if the nation’s economy shrinks by more than 5 percent this year despite the government’s plan to boost investment in infrastructure construction.
He told legislators that the government’s four-year special budget request totaling NT$500 billion (US$14.35 billion) was expected to help spur the nation’s economic growth by 1.02 percentage points each year.
“Many academics say that we are being too optimistic by trying to maintain minus 2.97 percent economic growth. But we have to make it happen by strengthening our execution of policies,” Liu said.
Liu said the nation’s economy became reliant on China long before the KMT assumed office last year and that the government had been doing its best to solve the problem.
“On the one hand, we would like to push [policies] to solve the immediate problem. [On the other hand] we also have to brainstorm on how to help our economy become more plural instead of putting all of our eggs in one basket,” Liu said.
Saying that countries like Taiwan, which relies heavily on exports, had been badly hit by the global financial crisis, Liu said the government needed to evaluate how to save the country’s industries amid a decrease in global demand. The most urgent problem the government must resolve is the rising unemployment rate, he said. Liu added that officials would fully support banks so they could provide financial support to enterprises, allowing enterprises to refrain from laying off employees.
Liu said he believed the government’s policies would have a favorable impact on the economy in the next two to three months, adding that the government hoped to keep unemployment under control.
Meanwhile, legislators across party lines yesterday voiced opposition to the government’s plan to levy a luxury tax.
The Chinese-language United Daily News yesterday reported that the Ministry of Finance was mulling a tax on those who bought luxury items such as expensive watches and sports cars. The ministry’s tax bureau said the nation could increase annual tax revenues by NT$2.7 billion (US$77.8 billion) if the tax were set at 20 percent, the report said.
But Chinese Nationalist Party (KMT) Legislator Lo Shu-lei (羅淑蕾) of the legislature’s Finance Committee said it would be meaningless for the government to levy a luxury tax for rich people because it had previously lowered the inheritance and gift tax from a maximum of 50 percent to 10 percent — a policy considered by many to be tailor-made for the wealthy.
KMT Legislator Chang Sho-wen (張碩文) said the ministry should think twice before finalizing the policy as it might discourage international travelers from visiting Taiwan.
KMT Legislator Wu Ching-chih (吳清池) said that any government measures to increase tax revenues amid the recession would be inappropriate. He urged the premier to curtail discussion of the plan.
Democratic Progressive Party (DPP) Legislator Lee Chun-yee (李俊毅) said the DPP caucus also opposed a luxury tax at the present time.
The government should stimulate consumption, he said, and not levy a luxury tax that might restrain it.
Additional reporting by Rich Chang
Also See: GDP to contract 3.2%: Citibank
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