The Ministry of Finance (MOF) is studying the Cabinet's proposal to slash tax rates on rice wine and liquor to ease the pressure of rising commodity prices and curb rampant bootlegging, a ministry official said yesterday.
Detailed calculations to determine the range of such tax cuts and what the losses to state coffers would be will be presented after the ministry obtains formal instructions from the Cabinet, said Hseu Chun-an (許春安), director of the taxation agency's second division, during a telephone interview with the Taipei Times yesterday.
HIGH COSTS
His response came after Premier Frank Hsieh's (
Rice wine, a popular seasoning, is currently taxed at NT$185 per liter, compared to the NT$26 tax on a liter of beer.
The tax has pushed rice wine's retail price to more than NT$130 a bottle (0.6 liter), angering consumers and fostering the illegal wine-making business.
Hseu said lawmakers once proposed amending the Tobacco and Wine Law (菸酒稅法) to cut the tax rate on rice wine.
WTO NEGOTIATIONS?
However, as Taiwan is a WTO member, merely adjusting the tax on one product is not acceptable to the organization.
"We have requested that the Bureau of Foreign Trade confirm whether negotiations with other WTO members are still needed if Taiwan cuts the tax rates on both wine and liquor," Hseu said.
He said that such WTO negotiations could take one to two years.
"We hope Taiwan can just make an announcement to the global trade body about the possibility of the tax changes," Hseu said.
TAX REFORM REQUESTS
The ministry has been under pressure recently from other government agencies to speed up its tax-cut proposals.
Last week, Hsieh urged the ministry to lower inheritance and gift taxes in order to allow individuals to keep more assets and investments in the capital markets, and hopefully stimulating the stock market.
The ministry has planned to address that issue in the next stage of tax reform.
Its milestone Alternative Minimum Tax proposal is still awaiting approval in the legislature.
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