In response to a question raised by a lawmaker at the Legislative Yuan's Economics Committee yesterday, Chairman Chen Tian-jy of the Council for Economic Planning and Development (CEPD) said the council has been coordinating with different government agencies to work out relief plans.

One of the major steps under consideration is to reduce commodity tax rates on domestically produced vehicles, imported ones and the hybrid models, he said.

Sales of automobiles have continued shrinking on the domestic market after reaching a peak of 510,000 units in 2005.

Executives of auto industry estimated total sales may amount to between 200,000 and 250,000 units only this year.

They welcomed the move to slash the tax rates as being able to immediately alleviate their operating costs.

The commodity tax rates presently range from 25 to 30 percent, depending on size and model.

Government agencies considered reducing tax rates by breaking them into three categories: 15 percent, 20 percent and 30 percent.

The rate for hybrids that run on both gasoline and electricity will be shaved an additional 5 percentage points.

The rate for electric cars is presently slashed by 50 percent as an incentive but the government may remove the entire tax.

For imported vehicles, customs duty rates averaged 30 percent in 2001. As part of its deals to become a member of the World Trade Organization, Taiwan promised to gradually reduce the rate to 17.5 percent by the year 2010. The rate currently stands at 20.3 percent.

Auto executives suggested that the government also halve the customs duty rate on auto parts.

The tax rate on auto parts currently stands at 8 percent. Automakers expressed hope that slashing the rate to 4 percent would help lower production costs.

Officials from the Ministry of Economic Affairs attending the same legislative session said they are working on a proposal to give a NT$50,000 subsidy to each buyer of a new sedan and NT$30,000 to those buying pickup trucks to encourage owners of vehicles to purchase more environmentally friendly models.

For cars over 10 years old, the ministry will help used car dealers to ship the vehicles abroad, especially to the vast market in China.

MOEA officials said companies in Taiwan currently sell mostly auto parts to China.

But the ministry will provide assistance for selling whole cars and motorcycles to the mainland next year.

Officials said all these are short-term relief measures. The MOEA's long-term goal is to help the auto industry upgrade its research and development, as well as elevate the technological level to produce more competitive and fuel-efficient vehicles, they said.

Encouraged by the positive attitude of government officials in helping the struggling industry, share prices of auto companies and dealers moved up against the general downward trend on the stock market yesterday.

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