Tsai’s Triple Stimulus Voucher Programme and a Missed Opportunity

Written by Chieh-chi Hsieh.

Image credit: Air pollution in Taiwan by 君勇 林/Flickr, license CC BY-NC 2.0

After the Democratic Progressive Party (DPP) Government’s astonishing policy responses in containing the outbreak of COVID-19, the new battleground that would determine the trajectory of President Tsai Ing-wen and her Government’s approval rate lies in their ability to revitalise Taiwan’s economy. With the official launching of the “triple stimulus voucher” (三倍券) programme in July, it provides a good opportunity to evaluate the underlying rationale for this economic stimulus package and why it was a missed opportunity for Tsai to further her green agenda.

Tsai’s Triple Stimulus Voucher and Ma’s Consumer Voucher

In many aspects, the triple stimulus voucher shares similarities with the “consumer voucher” (消費券)issued by President Ma Ying-jeou in 2009. For instance, both financial stimulus packages are aimed at increasing domestic consumption amid global-scaled crises (i.e. 2020: COVID-19; 2008/9: global financial crisis), and both have roughly a 6-month fixed time period for residents to utilise coupons.

Yet, the difference between the two financial stimulus packages exhibits the varying approaches of the two Governments on reinvigorating the economy. To begin with, Tsai’s triple stimulus voucher has various restrictions in place compared to Ma’s policy. For instance, the triple stimulus voucher cannot be used for paying utility bills, taxes, fines, stock investments, and top-ups (e.g. online games and subway passes). Second, Ma’s consumer voucher programme distributes NT$ 3,600 directly to residents, whereas Tsai’s NT$ 3,000 voucher requires one to pay NT$ 1,000 whilst the Government makes up the remaining NT$ 2,000 margin. Although these restrictions and the value of the voucher have given opposition parties such as the Kuomintang (KMT), Taiwan People’s Party, and the New Power Party leverage points to criticise the DPP Government, closer observation of the programme exhibits Tsai’s attentiveness to macroeconomic dynamics in the global economy and strategy to reap the potential benefits of the reshuffle of the global supply chain.

There are two points that one can observe from the triple stimulus voucher programme which demonstrate the Tsai-Su Government’s strategy to ensure Taiwan’s macroeconomic soundness. First, the programme is aimed at ensuring the fiscal multiplier effect takes place (i.e. increased fiscal spending to guarantee an increase in GDP). Hence compared to KMT’s call for following the US and Japanese Governments’ cash handout programmes, imposing restrictions on the type of consumption residents can utilise the voucher for would theoretically enhance liquidity circulation. This would benefit the real economy insofar as preventing saving behaviour or leading to a substituting effect shown in Ma’s consumer voucher programme. In turn, compared to Ma’s consumer voucher programme, which drew up a special budget of NT$ 85.6 billion for its implementation, the triple stimulus voucher is expected to take up a lesser amount of approximately NT$ 50.5 billion.

The greatest advantage of maintaining rigorous fiscal discipline is that it becomes a “pull factor” to attract foreign investments. During Tsai’s first presidential term, Government debt has substantially reduced, and her commitment to maintaining fiscal discipline has enabled her to record the first balanced budget for 2020 in 22 years. One of the many benefits of maintaining sound macroeconomic fundamentals is that it allows cheaper access to overseas funds due to higher sovereign credit ratings by international credit rating agencies (i.e. Moody and S&P). In addition, it also prevents the probability of inducing “rating crises” which abruptly downgrades from credit rating agencies resulting in sudden capital outflow. Instances that high public debt level that led to a downgrade of sovereign credit ratings include South Korea during the 1997/98 Asian financial crisis, and Japan in 2015. Additionally, maintaining fiscal discipline is also argued to be an important factor that attracts foreign direct investments (FDI). Hence, with the US and Japanese governments call for reallocating global supply chains from China due to intensified tensions and the impact of COVID-19, sound macroeconomic conditions would be an important competitive advantage for Taiwan to become an attractive FDI destination vis-à-vis other Southeast Asian countries, which possess vast labour endowment.

A Missed Opportunity for Tsai to Further the Green Agenda

Although the DPP Government’s triple stimulus voucher programme is expected to increase domestic consumption, one of the missed opportunities is creating economic incentives for the consumption of eco-friendly consumer durables. Since the beginning of Tsai’s presidency in 2016, she has committed to the green agenda of increasing renewable and sustainable energy as well as reducing the country’s greenhouse gas emissions according to the 2016 Paris Climate Agreement. Yet after the Government suffered a setback to its green agenda (i.e. anti-nuclear policy) in November 2018, the occurrence of Hong Kong’s water revolution, and Xi Jinping’s 2019 New Year Speech in 2019, energy and environmental issues have become less emphasised in Tsai’s policy agenda as shown in her inauguration speech this May.

This is also the case when evaluating the Government’s NT$1.05 trillion coronavirus relief package. What is most evidently shown in the economic stimulus package is that it was purely formulated based on an economic rationale. For instance, the Executive Yuan specifically underscored that the aim of the relief package is “distributing benefits equally, achieving immediate results, strengthening industrial foundations and accelerating public work projects”. Hence the scope of the three segments of the relief package (i.e. financial aid; employment assistance; tax breaks) covers households, disadvantaged groups, small and medium enterprises (SMEs), and industries. Certainly, one can argue that the economic stimulus package must not exhibit any preferential treatments to specific industries. This is to avoid any unnecessary conflicts between the ruling party and opposition parties, and potential repercussions from domestic vested interest groups. However probing into the Government’s approved list of e-commerce platforms for utilising triple stimulus vouchers, it is easy to discern that the Government prioritises travel, transportation and entertainment industries. For instance, amongst the 132 approved vendors, 19 are theatres/cinemas, 20 are recreation resorts, whilst 26 are travel agencies and 40 are services in the transportation sector (e.g. taxi: 15; shuttle bus: 8; rail: 7; airlines: 6).

This shows that the Government did indeed have leeway for manoeuvring additional incentives that would further its green agenda such as promoting sales of electric vehicles and motorbikes with extra subsidies. This is particularly important for Taiwan given research have identified that fossil-fuelled vehicles and motorbikes along with other mobile sources of air pollution contributed to almost 40% of suspended fine particulate matter (PM 2.5) in Taiwan. Moreover, the promotion of electric vehicles and motorbikes does not merely address problems of air pollution but also links to Tsai’s goal of reducing greenhouse gas emissions. This is shown in the Executive Yuan’s ambitious action plan aimed at gradually phasing out fossil fuel-burning two- and four-wheel vehicles by 2040, and passing amendments to the Air Pollution Control Act in 2018.

In addition, inclusion of the promotion of green technology either via investments or creating economic incentives for consumers to purchase electric vehicles within economic stimulus packages is not unprecedented. For instance, Germany recently announced that the €130 billion economic stimulus package would include €6,000 subsidy for sales of electric vehicles and a temporal 3 per cent cut to VAT, and the UK Government’s £73.5 million investment in the automotive sector to develop green technologies. This shows that eco-friendly/green policies are not incompatible with stimulus initiatives that revitalise national economies.

Another instance that shows that Tsai missed a vital opportunity to further her green agenda is the recent survey released by Smart Mobility Association Taiwan. Based on the survey, it showed that 95 per cent of current legislatures support the development of electric motorbike industry, whilst 93.4 per cent stated that its prime objective is to address air pollution. This indicates that the repercussions of including the provision of additional subsidies for electric vehicles and motorbikes might be lesser than expected.

Whilst the DPP Government’s triple voucher programme may be effective in revitalising Taiwan’s economy, it is evident that Tsai has missed an opportunity to further her green agenda by excluding eco-friendly policy measure in the economic stimulus package. Yet on a positive note, with legal frameworks established and policy initiatives launched during Tsai’s first presidential term (e.g. Forward-looking Infrastructure Development Programme for Green Energy), it is unlikely that Tsai would backtrack on her policy commitment. One can only hope that Tsai’s Government would not fail to seize the next opportunity to further her green agenda when the chance arises.

Chieh-chi Hsieh received his PhD from the Department of Politics and International Studies, University of Warwick (UK). He also holds an MSc degree in International Political Economy at the Department of International Relations, London School of Economics and Political Science. You can follow him on twitter @DrHsiehCC.

This article is part of special issue on energy and environment.



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