Thu, Nov 20, 2008 page12

• Lawmakers question voucher program

  DETAILS, DETAILS The CEPD boss heard complaints about printing of the vouchers, the denominations and the overall effectiveness of the government’s economic plan

  • By Elizabeth Tchii / STAFF REPORTER
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  The government plans to begin issuing consumer vouchers on Jan. 18 or Jan. 19, Council for Economic Planning and Development (CEPD) Chairman Chen Tian-jy (陳添枝) said yesterday.

  Explaining the details of the voucher plan to the legislature’s Economics Committee, Chen said the government would also consider shortening the validity of the vouchers to six months.

  Since many people oppose the proposed ban on using the vouchers at foodstands or for taxis, Chen said the council would review details and come up with the final version of the plan within a week.

  Chinese Nationalist Party (KMT) Legislator Ting Shou-chung (丁守中) said fewer than 5,000 of the 60,000 food stall operators at the 480 public markets nationwide have business licenses.

  As most housewives and other consumers buy foods at traditional markets on a daily basis, it would not make much sense if vouchers could not be used at these markets, Ting said.

  While many details still need to be hammered out, Chen said the decision had been made to issue paper vouchers instead of plastic debit cards. He estimated the cost of printing each voucher at NT$1.1 to NT$1.2.

  “The more face values available, the costs of these molds would become prohibitive. After the number of face values are determined, then it will be important to decide what quantities of each face value are to be printed,” Chen said.

  Discussions with the central bank will help determine the exact allocations, he said.

  Ting then suggested embedding voucher stamps into regular currency during the printing process to cut costs by reducing the need for new molds and additional papers.

  The council’s proposal to print vouchers valued at NT$100, NT$200, NT$500 and NT$1,000 was also hotly contested on the legislative floor.

  KMT Legislator Lee Ching-hua (李慶華) urged government officials to drop the NT$200 voucher since the NT$200 bill had proven unpopular, although other legislators were in favor of it.

  Premier Liu Chao-shiuan (劉兆玄) announced the government planned to give each citizen NT$3,600 in vouchers to help boost consumer spending and revitalize the economy. The expiration date of the vouchers would be Dec. 31 next year, the Cabinet said on Tuesday.

  The council has forecast the voucher plan will boost GDP by 0.64 percent next year.

  The two major assumptions underlying the council’s model are full usage of the vouchers and a conservative economic multiplier effect of 0.04 percent.

  Democratic Progressive Party (DPP) Legislator Lee Chun-yi (李俊毅) was unconvinced the vouchers would really provide a boost to the economy.

  On average, each citizen spends NT$315,200 annually, which translates to 6 percent of GDP, so the council’s NT$3,600 per citizen voucher would represent just 1 percent of their annual average spending or only 0.06 percent of GDP, Lee said, not a boost of 0.64 percent.

  “The assumption of 100 percent usage of these coupons is fundamentally flawed. It is unrealistic. The Council for Economic Planning and Development did not take substitution effect into consideration, it did not consider people might simply not use their vouchers and it did not foresee people converting their vouchers on the black market and saving the cash,” Lee said.

  Lee said just providing cash would be a better alternative.

  ADDITIONAL REPORTING BY STAFF WRITER
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