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Cabinet mulls new measures to prop up economy

The government plans to take more steps to prop up a sluggish economy that has shaken the public’s faith in the new government more than three months after it took office, officials said yesterday.

Top government officials, including Vice Premier Paul Chiu (邱正雄) and Minister of Finance Lee Shu-te (李述德), said the measures would be discussed during Thursday’s Cabinet meeting.

The officials declined to provide details, but media reported that they include lowering the stock transaction tax and individual income tax.

Legislators Lai Shyh-bao (賴士葆) and Chiu Yi (邱毅) of the Chinese Nationalist Party (KMT) have pledged to pass a bill to reduce the 0.3 percent stock transaction tax, a move Chiu said would be a “wonder drug” for the plummeting stock market.

But the opposition cast doubt over the effects of lowering that tax, alleging it would do little to boost investor confidence.

Yesterday, Premier Liu Chao-shiuan (劉兆玄) urged the public to have faith in the government’s steps to revive the economy, such as NT$80 billion tagged (US$2.52 billion) for infrastructure projects.

“The money pumped into the projects launched in May to expand domestic demand will be given to local governments before month’s end,” Liu told reporters.

He added that Taiwan could expect an upturn in the economy in the fourth quarter.

“The various measures we took to boost domestic demand are only now beginning to take effect,” Liu said. “You will see an improvement in the fourth quarter.”

Liu also noted that up to 500,000 poor households were beginning to receive government subsidies, which would “help stimulate the economy.”

Meanwhile, the government was confident it could stabilize recent fluctuations in the stock market, an Executive Yuan official said on Saturday.

The official, who declined to be named, said that “preventing confidence from collapsing is the best remedy to save the stock market.”

He said four major government-run funds would soon enter the market to stem sharp declines in the stock market last week.

The funds — each worth hundreds of billions of NT dollars — are the Public Employees Pension Fund, the Labor Pension Fund, the Labor Insurance Fund and the Postal Savings Fund.
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