Taiwan's Cabinet announced Thursday it will spend up to 120 billion New Taiwan dollars (US$3.7 billion) in a comprehensive package aimed at lifting the sagging economy. The package, which seeks to boost domestic demand and encourage energy-saving investment, includes measures like offering interest free housing loans to newlyweds and subsidies to companies hiring new workers. Chen Tain-jy, chairman of the Council for Economic Planning and Development, said the measures will help Taiwan achieve the 4.3 percent economic growth projected for 2008. Taiwan earlier had forecast 4.78 percent growth but lowered the figure after recording a rare trade deficit in July amid soaring oil prices and the continuing global economic downturn. As part of the economic package, the Cabinet proposed to halve the securities transaction tax to 0.15 percent for a period of six months in the wake of a prolonged financial market slump. Taiwan's benchmark share index has fallen 26 percent in the first eight months this year. The opposition Democratic Progressive Party said it will not support the securities transaction tax cut because doing so would further worsen the budget deficit. The tax cut is expected to be passed with the support of ruling Nationalist Party lawmakers. Taiwan last cut the share trading tax in 1992. Despite the news, Taiwan's main stock index tumbled 206.06 points, or 3.19 percent, to 6,251.95 points. Traders said foreign institutional investors are continuing to pull their funds out of the island because of the bleak economic outlook. The lackluster economy and the stock market slump have prompted opposition calls for President Ma Ying-jeou to reshuffle the Cabinet. Ma's election in March was helped considerably by his promise to bring about an annual 6 percent economic growth rate and cut the unemployment rate to 3 percent from its current level of 4.06 percent. But last week, he said the targets will only be reached toward the latter part of his four-year-term. Finance Minister Lee Su-der said the new stimulus package was not aimed to bolster share prices alone. “We are trying to improve the economic fundaments in the short, middle and long term, and that will help with investment confidence,” Lee said.
