In an effort to boost sagging confidence in both the stock market and the government's economic policies, the Minister of Finance yesterday vowed to put off tax hike proposals and unveiled a revised market-stimulus package, the second in less than a week.
The news was enough to cheer up investors. After falling to 8,052 on Tuesday -- a low for the year -- the TAIEX roared back 4.6 percent yesterday, gaining 369.20 points to finish at 8,421.74.
The new measures, announced by Minister of Finance Shea Jia-dong (
For the most part, the 10 measures offer little that is new compared with previously announced policies, though some policies have been further clarified.
But the government wasn't just all talk yesterday.
According to local media, the four government insurance and pension funds were heavy buyers of stocks, purchasing more than NT$10 billion-worth of shares yesterday.
A key component of the government's market-boosting plan is a pledge not to raise taxes before exhausting all possibilities for spending cuts.
The government has also pledged to coordinate more with high-tech firms, which oppose proposals to tax employees' stock dividend bonuses at market value rather than book value. High-tech firms say the measure will reduce the nation's competitiveness while increasing costs.
Speaking directly on the tax issue, Shea said taxes "would not be considered for the time being," a reversal from previous statements in which he said "tax increases may be the only option."
Much of the talk of new tax measures stem from President Chen Shui-bian's (
As for the stimulus measures, Shea said the government would encourage local financial institutions to invest in the stocks of the traditional companies, which have suffered the most from falling share prices.
Other measures include trimming the number of public holidays and reevaluating a plan to raise the minimum wage.
Nevertheless, investors are expected to remain pessimistic in the short term, as most lack confidence in the government's ability to address the economic and political challenges facing the nation.
The government's market-saving measures announced Tuesday followed a similar announcement on June 29.
Ministry officials said then they had changed financial regulations to make it easier for investors to buy stocks on margin and make it more costly for investors to bet against stocks by selling them short.
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