The Executive Yuan promulgated 13 action measures to breathe life into Taiwan's economy at a press conference today.
Premier Jiang Yi-huah said that these measures are centered on "lifting the pot lid" to allow the economy to rise and include amending the capital gains tax on securities transactions, attracting the investment of NT$100 billion (US$3.3 billion) from life insurance funds into public infrastructure projects, and encouraging innovation and entrepreneurship as well as consumer spending through official rewards and subsidies.
Jiang said that the amendment of the law governing the securities gains tax is widely welcomed by the general public and called on the legislative caucuses of various political parties to join hands in fast-tracking this legislation to help boost Taiwan's stagnant economy.
"Taiwan is export-oriented," indicated the premier. "Its exports, however, have been impacted by the European debt crisis and the slowdown of mainland China's economy. As a result, the island has had a less-than-ideal performance in economic development, employment and worker salaries." To achieve an economic breakthrough, the government has worked out 13 action measures on four fronts: expanding consumption, attracting domestic investment, encouraging innovative business startups and amending legislation governing the securities gains tax.
The four-pronged economic stimulus package is summarized as follows:
I. Increasing consumption
1. Subsidizing purchases of energy-efficient household appliances: Subsidies will be provided for purchasing household appliances rated level 1 or 2 in energy efficiency, including NT$1,000 (US$33) for each gas stove, NT$1,000 (US$33) for each naturally ventilated gas-powered water heater and NT$2,000 ($67) for each artificially ventilated gas-powered water heater with such a rating. This subsidy becomes effective from June 1 and will last for three months.
2. Subsidizing high-efficiency motors: The industrial use of high-efficiency motors will be promoted and subsidized for the next three years. The purchase of International Efficiency 2 (IE2) motors and above will be funded the first year, and IE3 motors and above for the remaining two years. (IE3, or "premium efficiency," is a higher efficiency standard than IE2, or "high efficiency.") A budget of NT$60 million (US$2 million) will be allocated per year for the program, and it is anticipated to subsidize a total of 600,000 kilowatts (kW) of motors. (A product's wattage is its per-second energy usage rate; hence this figure represents the aggregate of the energy usage rates of all subsidized motors.) Taking the efficiency difference between IE2 and IE3 motors into account, the per-kW subsidy rate is NT$100 (US$3.33) per kW for the former and NT$300 (US$9.98) per kW for the latter. (Note: The details of the program will be released at the end of June, and the application period for the first year of the promotion is scheduled for July 1 to December 31, 2013.)
3. Expanding subsidies for public transportation vehicles, including buses and taxis: The replacement of a bus that has been used for over 10 years will be subsidized; the previous usage requirement was 13 years or more. For taxis, subsidies will be available after five years of use rather than seven years. The number of vehicles currently eligible for replacement subsidies will thus increase from 3,000 to 4,000. The amount of such subsidies includes NT$2.23 million (US$74,192) for a low-floor bus, NT$1.12 million (US$37,263) for a regular bus, NT$2 million (US$66,450) for a minibus, NT$115,000 (US$3,826) for a hybrid taxi vehicle and NT$40,000 (US$1,331) for a regular taxi vehicle.
4. Boosting tourism and tourist consumption: To draw high-level foreign executives working in mainland China, Hong Kong and Macau to visit Taiwan and further promote independent tours for visitors from these regions, more marketing and streamlined visa procedures will be planned. This includes lowering thresholds for multiply-entry visas for both mainland Chinese and foreign white-collar businessmen and strengthening communication with the mainland authorities to facilitate issuing multiple-entry visas for independent mainland Chinese tourists.
II. Stimulating domestic investments
1. Attracting investment in public works projects by insurance funds: Eligibility for private participation in infrastructure projects will be broadened to allow more large private funds, including those of insurers, to invest in public works. The rights and duties of the competent authority and the private organization are defined through contracts signed between the two parties. If approved by the competent authority, the operating duties for the private organization stipulated in the contract can be outsourced to a third party through a commission or lease legally bound by contracts.
2. Assisting local authorities with major investment projects: The Ministry of Economic Affairs (MOEA) will revise the Regulations Governing Business Recruitment of Local Governments in order to establish a system to reward local governments for their performance in attracting private investments. The MOEA will also set up special projects to manage and assist with major private investment cases. Thus far such assistance has helped local government to seal major investment projects of about NT$40 billion (US$1.3 billion). For 2013, a total of NT$1.2 trillion (US$39.9 billion) in private investment is expected to be secured.
3. Expediting the execution of government's procurement plans for the year: An estimated NT$20 billion (US$667.7 million) of government budgets will be injected into the market early through accelerated resolution of contract disputes. Another NT$10 billion (US$333.9 million) is expected to be added through the strengthening of control mechanisms for rescinding contracts and project stoppages to coordinate the resolution of disputes and the early resumption of work. An additional NT$500 million (US$16.7 million) will be made available by speeding up delayed payments of project funds to manufacturers.
4. Accelerating environmental assessment and land rezoning processes: Environmental impact assessments (EIAs) will be sped up and land rezoning review mechanisms simplified. The responsibility of competent authorities in these processes will be increased, and they will assist in conducting preliminary reviews. The Environmental Impact Assessment Enforcement Rules will be reviewed, with reference material for EIA procedural changes expanded and the range of content changes illustrated with side-by-side tables comparing the original and new regulations amended. As for reviewing urban lands designated for major infrastructure projects, the review mechanism shall be streamlined from "two levels, two reviews" to "one level, one review." Review procedures for major investment cases shall adopt either the "parallel" or the "joint conference" method.
III. Motivating innovative startups
1. Incentive plan from innovation to startups: The National Science Council and enterprises shall provide NT$60-70 million (US$2.0-2.3 million) of sponsorships every year along with entrepreneurial and government resources to provide young people, including students, with opportunities to innovate and start businesses. Every year, 80 creative teams will be selected for guidance and training, with eight to 12 ultimately being selected to receive NT$2 million (US$66,540) each in start-up funding.
2. Start-up angel plan: The National Development Fund shall pool NT$1 billion (US$33.4 million) in five years to provide start-up capital for innovators in various fields to boost momentum for private-sector innovation. Every year, professional institutions shall carry out the selection and provide assistance and guidance as well as incubation for 60 startups and provide funding based on the scope of the project. Successful enterprises shall inject funds into future startups.
3. Reasonable appraisal and taxation system on technology investment: Technologies that are innovative, critical and forward-looking and require more investment in research and development (R&D) before their market value can be ascertained can project planned and occurred R&D expenditures to date as capital cost. Applicability will not be limited to startups; government or public research institute grants, commissions and funds for science and technology R&D according to relevant laws can be counted as such costs.
4. Enacting standards for listing on the emerging start-up market: Based on international development experience, standards for the emerging start-up market will be put into place to promote innovative high-tech, agricultural technology and cultural creative businesses for entry into the capital market.
IV. Revising the capital gains tax on securities transactions
In order to invigorate the local capital market, the government has decided to propose an early revision to the capital gains tax on securities transactions after gathering views from various sectors. The revision is drafted based on the fairness principle of the taxation system and aims to improve economic efficacy with simplified administrative measures.
The proposed amendments are as follows:
1. Removing the provision that in 2013 and 2014, the tax will only take effect when the Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX) surpasses 8,500 points.
2. Beginning in 2015, the capital gains taxation of large traders, defined as those who sell over NT$1 billion (US$33 million) of stock in a year, will principally be based on government assessment of securities gains, with verification by the taxpayer. After the National Taxation Bureau calculates stock transaction income, it will charge a separate 0.1 percent tax on such income that is in excess of NT$1 billion.
Those attending today's press conference included Premier Jiang, Finance Minister Chang Sheng-ford, Transportation and Communications Minister Yeh Kuang-shih, National Science Council Minister Chu Ching-yi, Financial Supervisory Commission Minister Chen Yuh-chang, Environmental Protection Administration Minister Shen Shu-hung, Public Construction Commission Minister Chern Jenn-chuan, Council for Economic Planning and Development Deputy Minister Chen Hsiao-hung, Economic Affairs Vice Minister Duh Tyzz-jiun, Interior Administrative Deputy Minister Tseng Chung-ming and Executive Yuan Spokesperson Cheng Li-wun.