Cabinet still studying shopping coupon plan

After taking initiatives of slashing interest rates and bailing out financial institutions, governments of all leading economies have been taking additional measures, including cutting taxes, offering tax rebates and issuing purchase vouchers, to help rev up sagging domestic economies amid economic sluggishness triggered by the unprecedented global financial crisis.

As all economic data and forecasts point to slipping into a global recession, political parties as well as business and academic communities have come up with various suggestions.

The Council for Economic Planning and Development (CEPD) proposed that the government consider subsidizing the issuance of purchase vouchers or merchandise coupons in an effort to boost spending and drum up business in shopping districts around the country.

Chairman Chen Tain-jy of the council brought up the suggestion to Premier Liu Chao-shiuan at a meeting of senior officials a day earlier. CEPD officials also stressed that distributing consumption vouchers is only one of many options worth evaluating and implementing to cope with the global crisis.

The proposal, however, was greeted with mixed responses, although it had been tested and used in some nations. One Cabinet minister reportedly suggested that cash should be distributed to those in need, rather than coupons.

At least one banker said the government should consider issuing a “tax reduction/rebate card” to all citizens if the Cabinet wants to see an immediate effect to encourage spending.

Purchase vouchers were distributed by the Japanese government to children and low income senior citizens in Japan in the spring of 1999 as part of an economic recovery plan. Japan is ready to launch a new program to spur spending in January.

Similar tickets, including food stamps and cash or gift cards, have also been distributed by the U.S. government in efforts to stimulate consumer spending. Governments in Hong Kong, Macau and Singapore distributed bonuses to all citizens as part of their economic stimulus packages.

The opposition Democratic Progressive Party has been pushing for a tax rebate program, but officials at the Ministry of Finance seem to prefer issuing purchase coupons over providing tax rebates on grounds that low income people won’t receive tax refunds. They said most people would only deposit tax rebates into their bank accounts, and would further bolster the bloating deposits in the nation.

Minister of Finance Lee Sush-der said the government can easily issue state bonds to back up the purchase coupon programs, but he said there must be a set of criteria to exclude those with high incomes so as to provide the resources to needy people.

According to officials of the Social Affairs Department under the Ministry of the Interior, experts from the academic sector have also proposed the idea of consumer coupons, but it is still too early to tell how and whether the idea should be implemented.

The CEPD must first formally put forth a plan, including explaining how the coupons would work, which stores should be included in the program and whether the rich should be excluded from the coupon beneficiary list, the officials said.

They said the MOI has already been implementing a program to provide financial assistance to people below or on the edge of the poverty line. Efforts should also be made to reconcile this program with the purchase coupon plan, they added.

Officials from Premier Liu’s office said the Cabinet is open to all suggestions. The Cabinet has not yet made any decision on the matter whether the government should distribute shopping coupons, but the idea would require very careful study and planning, they said.

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