Vice Premier Eric Chu (朱立倫) yesterday told the Council for Economic Planning and Development (CEPD) to compile a monthly cost of living index to help the government better understand public perception of the state of the economy.
Chu, who heads the Cabinet’s task force on economics, commodity prices and tax reform, said traditional economic indicators, such as GDP and the consumer price index (CPI), fail to reflect public sentiment because items that are not considered daily necessities carry significant weight.
Chu cited the latest CPI data as an example, saying it is expected to contract 0.68 percent this year given a high base last year, but food costs have surged following Typhoon Morakot.
ADVISE
To address the issue, the newly installed vice premier directed the CEPD to come up with a cost of living index within a month and publish the data monthly to better advise the government on policy decisions.
“The new index should enable the government to stay in tune with grassroots perception of the economy,” Chu said, adding that the proposal was in line with Premier Wu Den-yih’s (吳敦義) concept of “grassroots economy.”
Wu said last week that while he was not an expert on economics, he believed the government could use other factors, such as restaurant and retail business volume, or truck traffic flow, to gauge the nation’s economic health.
Chu agreed, saying the government should use language that is more easily understood by ordinary people and factor in the jobless rate, household income and home purchasing power when drafting economic policies.
TAX HIKE?
Chu also dismissed media reports of a business tax hike, saying neither the tax reform committee nor the financial team had mentioned the subject during discussions.
“The reports are groundless,” Chu said of local media reports that the Cabinet planned to raise business tax rates from 5 percent to 6 percent or 7 percent to help rein in government debt.
Chu said the economy remained weak and spurring economic growth would continue to top the Cabinet’s agenda. He urged the CEPD to strengthen its role as an economic think tank.
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